The Affordable Care Act (ACA) came into law in 2014. It ushered in new requirements regarding employers and providing health insurance to their employees, including restrictions on how much coverage employers must provide in order to avoid facing consequences. The Affordable Care Act (ACA), made it so that providing your employees with health insurance coverage is not only an extra benefit but an obligation. Let’s take a closer look at minimum essential coverage.
What Is A Minimum Essential Coverage Plan?
Minimum essential coverage (MEC) plans are health insurance plans that organizations known as Applicable Large Employers (ALEs) enroll in to provide their employees with a limited amount of health insurance. By having an MEC plan employers will meet the requirements set by the ACA and avoid facing any type of penalties. Any company with 50 or more full-time equivalent employees is considered an “ALE.” To be considered a full-time employee, one has to work at least 30 hours in a week or a combined 130 hour per month. An MEC plan is going to be a good option for companies that are looking for a plan that offers coverage for what is required by the ACA and do not wish to pay for much more beyond that.
Do Employers Have To Offer A Minimum Essential Coverage Plan To Their Employees?
Under the Affordable Care Act, employers have a responsibility to offer insurance to their employees. This responsibility falls on any corporation that has more than 50 full-time equivalent employees. This means that certain employers must offer an option for minimum essential coverage that is “affordable” and that provides “minimum value” to their full-time employees (and their dependents). If companies and employers fail to do this, they could incur financial penalties.
Potential Penalties For Not Offering MEC To Employees
Without protecting your business by offering a minimum essential coverage (MEC) plan, your organization may face the risk of paying one of two types of fees, known as penalty A and penalty B. These penalties have increased in the year 2021 and are currently as below:
- Penalty A is $225 per month ($2,700 annually) for each employee that is not offered a minimum essential coverage plan (minus your first 30 employees).
- Penalty B is $338.33 per month ($4,060 annually) per each employee that is not offered a minimum value coverage at an “affordable rate” that also goes to the healthcare exchange and receives tax credit.
Another factor to keep in mind is that Penalty B will not be higher than penalty A. This is because penalty B has a maximum to cost the full amount of penalty A.
Why Employers Should Consider An MEC Plan
If you are an employer or HR manager of a company that has more than 50 full-time employees and are looking for a solution to avoid paying extreme costs to provide your employees with health care coverage, then an MEC might be the right option for you. This coverage plan is going to eliminate the employers having to pay not only large expenses for an insurance plan, but also take out the risk of having to pay the penalties associated with not providing the right amount of coverage. With this type of plan you are going to provide all your employees with a base level of insurance coverage that they can benefit from while still keeping your cost per employee relatively low. An MEC plan typically only covers preventative and wellness services.
Talk With New City About Minimum Essential Coverage
Speak to the experts at New City Insurance for more information on minimum essential coverage plans. Since our founding in 2008, we have been dedicated to serving the insurance needs of our clients while reshaping the industry as we know it. We offer a variety of plans, including group health insurance, as well as dental, life, and vision. Our group health insurance plans (both high-premium and low-premium) include HMO’s, PPOs, and EPOs.
If you are unsure about what level of coverage you as an employer are required to offer your employees, we can assist you, as we are committed to remaining compliant with federal laws such as the Affordable Care Act. We have taken the time to fully understand and know all the limitations, regulations and requirements that come with the ACA, so that you don’t have to. Work with us to ensure you are within the obligations and protect your company from having to pay any large fees associated with not following the right guidelines.
Feel free to call New City Insurance today at (888) 210-2759 or contact us online to request a consultation. We are fully prepared and ready to discuss Minimum Essential Coverage Plan options that could benefit you and your company.