The True Value of Limited Benefit Minimum Essential Coverage

A minimum essential coverage (MEC) plan that doesn’t provide minimum value can still be an asset to large employers providing health coverage.
 
First, it helps to understand the definitions of minimum value and minimum essential coverage.

The Affordable Care Act (ACA) requires employers to provide employees with a plan that provides minimum value health care coverage – which means that the plans must cover at least 60% of average costs and must provide substantial coverage for inpatient and physician services.
 
Minimum essential coverage refers to the coverage a person needs to avoid the ACA’s individual mandate penalty — a penalty which is no longer in force. Most employer-sponsored health plans are considered MEC — even if they have limited benefits and don't provide minimum value.
 
For a fully insured plan, minimum essential coverage includes these essential health benefits:

• Ambulatory services
• Chronic disease management, wellness care and preventive services
• Emergency services
• Hospitalization
• Laboratory services
• Maternity and newborn care
• Mental health and substance abuse treatment
• Pediatric services, including dental and vision care for children
• Prescription drugs
• Rehabilitative and habilitative services

 
However, a self-funded plan may meet minimum essential coverage by providing any one of the essential health benefits listed above – typically this is done by providing 100% coverage for preventive services because it’s the cheapest of the essential health benefits to provide.
 
The dilemma
Applicable large employers (50 or more full-time equivalent employees) are required by the ACA to provide health care coverage if they want to avoid financial penalties. To avoid the ACA's employer mandate penalty, they must offer coverage to at least 95% of their employees. To avoid the larger, first level “A” penalty, employers must offer a plan that provides MEC. Not doing so triggers a penalty that applies to all full-time employees (less the first 30) when any one employee goes to the ACA marketplace and receives a subsidy for individual coverage.
 
To avoid the smaller, second level “B” penalty, they must offer coverage that is affordable and that provides minimum value. If they don’t, they will be charged a penalty for each individual employee that receives a premium subsidy on the ACA Marketplace.
 
The solution
Unfortunately, providing a minimum value plan is not always possible because of the cost. As an affordable alternative, many large employers are taking the chance of having to pay the second penalty by only offering a plan that is considered minimum essential coverage but that doesn't provide minimum value
 
The employer advantage
The advantage of a preventive coverage MEC plan to an employer is that it avoids the larger “A” level penalty at a very low cost. This cost is well below the potential penalty exposure. 
 
Interested? Your agent or broker can show you MEC plans to see if they’d be a good fit your needs.

12762s0222

Allied National

Founded in 1970, Allied is one of the nation's oldest and most experienced third-party administrators. Allied National is a 90 Degree Benefits Company, a subsidiary of Blue Cross Blue Shield of Alabama. As the small group benefit experts, Allied works with small business employers to provide unique and affordable group health benefits.