With the implementation of the Affordable Care Act (ACA), large employers (above 50 full-time equivalent employees) are now required by law to offer health insurance to their employees. However for many businesses, it can be nearly impossible to find a health insurance plan within their budget. Businesses then have to decide between providing health insurance to their employees at a cost they cannot afford or potentially face substantial fines. This is why New City Insurance offers minimum essential coverage plans, which meet the requirements of the ACA and protect companies from penalties at a cost much lower than that of a traditional health insurance plan.
What Is A Minimum Essential Coverage Plan?
A minimum essential coverage (MEC) plan is a type of health insurance plan for companies known as Applicable Large Employers (ALEs) who are required to offer health insurance to their employees but are unable to do so because the associated costs are too high for them.
Under the Affordable Care Act, all companies with 50 or more full-time equivalent employees are considered “Applicable Large Employers.” ALEs can face one of two types of penalties for failing to offer adequate coverage. The “A penalty” applies when an employer does not provide minimum essential coverage to at least 95 percent of its full-time employees. The “B penalty” is issued when an ALE offers coverage to at least 95 percent of its FTEs but each employee was not offered a minimum essential coverage option that was deemed “affordable” and that provided “minimum value.”
For 2021, the A penalty is increasing to $225 per month ($2,700 annually) per employee that is not offered minimum essential coverage minus the first 30 employees. The Penalty B amount for 2021 is $338.33 per month ($4,060 annualized) for every employee not offered minimum value coverage that also goes to the healthcare exchange and receives a tax credit. The B Penalty is capped at the full cost of the A Penalty, so the fine for the B Penalty can never be higher than the fine for the A Penalty. Investing in MEC plans could ultimately save your organization money in the long run while simultaneously giving your employees peace of mind knowing they have access to basic preventive care.
In short, MEC plans protect ALEs from Penalty A because they provide minimum coverage in accordance with the ACA. They also protect ALEs from Penalty B because this type of penalty occurs if an employee is not offered affordable minimum value coverage and enters the individual exchange (thereby receiving a tax credit to help pay for coverage). When an employee is enrolled in an MEC plan, he/she no longer qualifies for public exchange-related tax credits.
What Is Covered With A Minimum Essential Coverage Health Plan
Minimum essential coverage health plans typically cover preventative and wellness services. Overall, MEC plans are a perfect fit for companies that don’t want to pay for a comprehensive plan, but want to avoid the penalties otherwise.
Are You Compliant With A Minimum Essential Coverage Plan?
If you are responsible for 50 or more employees and looking for an affordable health plan then an MEC plan could be the best option for you. Since the ACA was passed, all major health plans – including minimum essential coverage plans – are obligated to help all enrollees pay for certain medical services, regardless of their health status. This is the essence of ACA compliance. For more information on minimum essential coverage plans and compliance with this law, you can visit healthcare.gov.
Contact New City For More Information
Reach out to the professionals at New City Insurance for more details on minimum essential coverage and compliance with the ACA. We offer a variety of affordable group health insurance plans so we are sure to find the right fit for you and your business. We are ready to work with you and talk through your options to ensure that you are protected from any unforeseen penalties. Call New City Insurance today at (888) 210-2759 or contact us online to request a consultation.