Minimum Essential Coverage

What is a Minimum Essential Coverage Plan

Minimum Essential Coverage (MEC), also called Qualifying Health Coverage, is any health plan that meets any of the Affordable Care Act (ACA) requirements for having health coverage (The 10 essential health benefits).

Prior to 2019 (Any period before April 2020 filing), the original Obama care law required everyone to maintain MEC coverage (or qualify for an exemption) or face a penalty for non-compliance. However, some individual states still charge fees to people without minimum health coverage. Obama care also mandates Health Insurance Companies to provide a certain level of coverage(MEC) with every plan.

MECs can be purchased (or self-funded) as a standalone product, or they can be combined with various types of healthcare coverage.

What’s covered in a MEC Plan

Any MEC-compliant plan will cover the following 10 Essential Health Benefits:

Outpatient care
Emergency Room(ER) care
Treatment for inpatient care
Prenatal and Postnatal care
Mental health and substance use disorders
Your prescription drugs
Rehabilitation after an injury, disability, or chronic condition.
Lab testing
Preventive services
Pediatric services (includes dental care and vision care for children)

What is Minimum Essential Coverage eligibility

Who is eligible for a subsidy

Employees who don’t have access to an employer-sponsored health plan could be eligible for subsidies on the exchange if they can’t qualify for Medicaid or other programs, are not enrolled in any other employer-sponsored coverage and meets either of the following conditions:

Their share of the premium exceeds 9.5% of their household income
The Health Plan pays for less than 60% on average of covered health care expenses (e.g. coverage offered is no more than 60% actuarial value).

For post-2014 years, penalty amounts will be indexed by a premium adjustment percentage for that calendar year.

Employer Minimum Essential Coverage

The ACA “shared responsibility” provisions also called the “employer mandate” or “play or pay”, generally require large employers (50+ full-time employees and working at least 30 hours per week) to provide health coverage that meets ACA’s specifications or pay a fine.

The fine is usually applicable should any of their full-time workers access government premium credit or subsidy to buy their own insurance through the marketplace.

Any large employer’s plan has to be both affordable and provide minimum value at the same time.

They are under no obligation to cover ACA’s essential health benefits, and nor are they required to fall into any of ACA’s meta-level ranges. This category includes plans that predate ACA implementation. The minimum value provision is instead the yardstick that large employer plans must meet or exceed.

Businesses with fewer employees(less than 50) are exempt from this mandate, but if should they do so they must meet certain ACA specifications.

What is minimum essential coverage providing minimum value

Minimum essential coverage vs. minimum value

Both terms come into place via the ACA.

Minimum Essential Coverage (MEC) is simply coverage that fulfills the ACA’s individual mandate.

Minimum value, on the other hand, has to do with the employer’s mandate. It’s a measure of whether a plan offered by a large employer provides adequate coverage and whether its employees are still eligible for subsidies under the exchange.

For an employer-sponsored plan to provide minimum value, it must

cover at least 60% of the average medical costs across a standard population (i.e. equivalent to the bronze plan in the individual/small group market), and
The cover must have “substantial coverage” for inpatient and physician care.

Plans considered as Minimum Essential Coverage

MEC plans designated by statute or regulations include the following:

Employer-based coverage (Including COBRA and retiree plans)
Medicare Part A or Part C coverage (Part B doesn’t qualify as a standalone)
Medicare Advantage (MA) plans
Most Medicaid coverage (Apart from limited coverage plans)
Children’s Health Insurance Program (CHIP) coverage
Coverage under a parent’s plan
Self-funded health coverage provided by universities to their students
Health Coverage extended to Peace Corps volunteers
Health plans that are available in the individual market, including qualified insurance offered through the Health Insurance Marketplace.
Most Medicaid coverage
Some types of veterans’ Health Plans by the Veterans Affairs
Most TRICARE Plans
Cover provided under the Non-appropriated Fund Health Benefit Program
Refugee Medical Assistance
State high-risk pool coverage

Plans not considered Minimum Essential Coverage

This includes Plans that do not provide major medical coverage and are not regulated by the ACA (“excepted benefit”).

Examples of non-MEC plans include;

Stand-alone vision/dental plans
Workers’ compensation plans
Accident or disability plans
Medicaid plans with limited benefits e.g. family planning care
Individual market insurance policies providing coverage for less than 12 months
Indian Health Services coverage as a stand-alone,
Sharing ministry plans (although members have an exemption from ACA’s individual mandate penalty).
Cash benefit Plans
Discount Plans

Bottom line

This MECs concept remains key for purposes of Special Enrollment Period (SEP) eligibility.

A qualifying event only triggers a SEP for ACA-compliant coverage if the person already had a MEC plan. Prior coverage was via a health care sharing ministry, short-term plan, fixed-indemnity plan, discount plan, etc. will not trigger SEP.

MEC plans come in different variations. Please note;

MECs are not the same as Minimum Value Plans (MVP), hence they may necessarily not provide the 10 essential health benefits.
Employees in MEC-sponsored plans may be eligible to qualify for Advanced Premium Tax Credits. They may use the marketplace as a primary in the coordination of benefits.
MEC plan can also be designed as a qualifying HDHP, hence used to pay for medical expenses pre-tax.

Finances and Taxes

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