One of the expressed goals of the Affordable Care Act, when it was passed by Congress in 2010, was to make affordable health insurance available to more people. Unfortunately, that didn’t materialize for everyone – even for those covered by their employers’ health benefits.
For instance, the Kaiser Family Foundation and Los Angeles Times’ 2019 survey found that two in five adults covered by employer-sponsored insurance reported difficulty affording medical care, prescription drugs or premiums.
In an attempt to lower premiums, many employers have turned to level-funded plans that offer health benefits. Level-funded plans can save employers money by paying the claims of their employees with their own money instead of insurance premiums. Plus, 12 level monthly payments each year cover all the costs for an employer’s group plan.
One of the most affordable level-funded options are Minimum Essential Coverage Plans (MEC).
An Affordable Solution
MEC Plans are limited benefit plans designed to help group plan sponsors satisfy the ACA Part A requirement to provide Minimum Essential Coverage at a very low cost. This cost is well below the potential penalty exposure.
A basic MEC plan offers coverage for federally mandated preventive services at 100% of eligible charges with no copays, deductibles or annual or lifetime limits. This is the cheapest of the essential health benefits to provide and is popular amongst large employers who can’t afford standard coverage plans, but want to help their employees anyways. Plans, like Allied National’s MEC Plus and MEC Advantage, offer preventive care plus additional benefits such as a copay on generic drugs, primary care visits, lab and x-ray services and diagnostic testing.
An added benefit to purchasing a MEC Plan is that the plan is guaranteed issue. All eligible employees and/or dependents can be covered, and no one has to answer health questions or undergo a medical exam. This can be particularly beneficial to an employer who has a large or unhealthy workforce.
MEC Plans also can be used in conjunction with carve-out plans. With a carve-out plan, employers can reward certain employees with more generous benefits while still offering other employees coverage such as a MEC Plan. Many companies need to offer generous benefits to attract top candidates, but cannot afford to offer these types of benefits to all employees.
If you are an employer, your broker can help you determine how best to use a MEC plan to avoid the Affordable Care Act “A” penalty and support your employees.
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Allied National is a 90 Degree Benefits Company, a subsidiary of Blue Cross Blue Shield of Alabama. Founded in 1970, Allied National is one of the nation's oldest and most experienced third-party administrators. We're the small group benefit experts working to provide unique and affordable group health benefits to small business employers.