Feds move to close Obamacare hospital coverage loophole

The federal government said Tuesday it will soon move to close a loophole in Obamacare that could allow big employers to refuse to cover employees' hospitalizations.

That loophole is significant because hospital-stay costs can quickly become high.

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The loophole is linked to Obamacare rules that will require mid- to large-size employers starting in 2015 to offer affordable health plans to employers or pay a fine.

Under the Affordable Care Act, such plans must have a so-called "minimum value," in which health plans cover around 60 percent of the costs of benefits, on average.

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But some health insurance plans now being marketed to employers do not include in-patient hospitalizations as a covered benefit for workers, according to the U.S. Health and Human Services Department.

Nonetheless, some of those plans reached the 60-percent minimum value threshold according to an online calculator, HHS said.

In a "fact sheet" posted online Tuesday, HHS said it believes "that plans that fail to provide substantial coverage of in-patient hospitalization services or for physician services (or both) . . . do not provide the minimum value intended by the minimum value requirement."

HHS and the Treasury Department "will shortly propose regulations to this effect," and expects the rules to be finalized and implemented in 2015.

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The departments said because of that intended regulation, health plans that lack coverage for hospitalizations or physician services "should not be adopted for the 2015 plan year."

But HHS also said employers who have already begun enrolling workers in such plans before Tuesday will not be affected by the expected regulation.

Where Tenet got its boost
Where Tenet got its boost   

However, until the regulation is issued, workers at companies with such plans may be able to get federal subsidies to buy plans elsewhere, on government exchanges, if their incomes qualify them for that financial aid, according to HHS.

Under the ACA, workers cannot get such financial assistance to buy plans purchased through the health-care exchange if their employer is offering them a plan that provides minimum value.

The fact sheet can be read here.

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The fact sheet was posted a day after USA Today published a story detailing the Obama administration's intention to close the hospitalization loophole.

In that story, Brian Klepper, CEO of the National Business Coalition on Health, said that plans that do not cover the costs of hospitalizations are "preying on vulnerable people who don't have resources."

"The purpose of insurance is to cover the services that most of us cannot afford when we desperately need it," Klepper told USA Today.