Since the Affordable Care Act (ACA) fully went into effect in 2014, health insurance companies cannot deny coverage to individuals with pre-existing conditions such as cancer, epilepsy, and diabetes. All ACA-compliant plans are now obligated to help all participants pay for medical care, regardless of their health status. One choice of the plans that meet certain ACA requirements are called Minimum Essential Coverage (MEC) or “skinny” plans. Below is a closer look at what this is and how they work.
What Is Minimum Essential Coverage?
Minimum Essential Coverage (MEC) is insurance that meets the basic requirements set forth by the Affordable Care Act (ACA) for offering health coverage to a company’s employees. The ACA was designed to give individuals greater access to health insurance plans and provisions. All ACA-compliant health plans must offer their enrollees assistance when paying for certain medical services, regardless of their health status. A lot of plan options that employers choose to offer their employees are going to be considered well above the minimum essential coverage threshold, but an MEC plan is going to include just the basics.
What Is A Minimum Essential Coverage Plan?
A minimum essential coverage health plan is a type of plan that employers enroll in to protect themselves and their company from the penalties that come from the ACA for not providing coverage. MEC plans can provide your employees with basic health coverage while potentially saving your organization a substantial amount of money in the long run.
These basic plans are offered by organizations known as Applicable Large Employers (ALEs), which are companies that have at least 50 equivalent full-time employees. These plans cover preventive and wellness tests and treatments. Although the overall coverage scope can seem limited, it is enough to ensure that you are not going to be subject to any penalties that come from the ACA.
Penalties for not offering at least an MEC plan or health plan at all to your employees can be extreme. These could include two main types of penalties, penalty A and penalty B.
Penalty A occurs when a company that is considered an ALE does not offer MEC to at least 95 percent of its full-time employees. The cost of this has increased in 2021 to be $225 per month, or $2,700 for the year for each employee (minus the first 30 employees) that is not offered minimum essential coverage.
Penalty B takes place when ALE companies do offer at least 95% of their full-time employees coverage, but each individual was not given a health plan that was deemed “affordable” or that provided “minimum value”. This cost was also raised in 2021, and can run a company $338.33 a month or a total of $4,060 per year for each employee that is not given the option of a minimum value coverage who also goes to the healthcare exchange and receives a tax credit.
Penalty B has a max limit of the full cost of Penalty A. This ensures that the fine for penalty B will not be more than the fine for penalty A. A minimum essential coverage plan makes sure you are protected from these potential penalties.
Who Should Consider A Minimum Essential Coverage Plan?
You should consider getting an MEC plan if your company has over 50 full-time employees and are looking for a way to get around significant costs for your employee health care and benefits. An MEC plan is an affordable option that offers base value coverage for all your employees.
A full-time employee is considered to be anyone who works a minimum of 30 hours in one work week or 130 hours per month.
How Does Minimum Essential Coverage Work?
With an MEC plan you and your employees are going to receive coverage on a basic amount of health benefits. You need to guarantee that you are providing all your employees that are considered full-time with the same access and coverage type. An MEC plan is the best option for you to guarantee the required amount of coverage to all your employees while not having to pay enormous amounts of money out of your company’s pocket.
Talk With New City Insurance About Minimum Essential Coverage
Speak to the experts at New City Insurance in San Diego 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.
At New City, we are proud to offer a wide variety of benefits, including group health insurance, wellness plans, and 401k & retirement plans. We provide both high-premium and low-premium plans, so you can choose the option that is most affordable to you. Our group health insurance plans include HMOs, PPOs, and EPOs. We have advanced benefits administration technology and are committed to remaining compliant with all federal healthcare laws and regulations, including the ACA, COBRA, HIPAA, the Employment Retirement Income Security Act (ERISA), and the Family and Medical Leave Act (FMLA).
Call New City Insurance today at (888) 210-2759 or contact us online to request a consultation or to learn more about our insurance offerings.