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Minimum essential coverage is the ACA's baseline category of health coverage that satisfies the individual coverage requirement and, for applicable large employers, the obligation to offer coverage to full-time employees. Most employer-sponsored group plans, Medicare, Medicaid, CHIP, TRICARE, and marketplace plans qualify, but excepted benefits do not.
MEC is a status test, not a richness test. Nearly any employer-sponsored group health plan counts, including grandfathered plans and self-funded arrangements. What does not count is excepted benefits coverage such as standalone dental and vision, most fixed-indemnity policies, accident-only coverage, disability, workers' compensation, and short-term limited duration insurance.
For applicable large employers, offering MEC to at least 95 percent of full-time employees and their dependent children avoids the larger of the two employer shared responsibility penalties, sometimes called the sledgehammer penalty under section 4980H(a). It does not, by itself, avoid the second penalty. That one applies per employee if the offered coverage is not affordable or does not provide minimum value, so MEC alone is only half the analysis.
This distinction fueled the market for skinny MEC plans that cover preventive services and little else. Such plans can satisfy the offer requirement while leaving employees exposed and still triggering the affordability and minimum value penalty when an employee gets a marketplace subsidy. Any entity providing MEC, including self-funded employers, must also report it under the IRS information reporting rules on Forms 1095-B or 1095-C. If you sponsor a plan, confirm in writing with your carrier or administrator whether it is MEC, provides minimum value, or both.
Nearly any employer-sponsored group health plan, including grandfathered plans and self-funded arrangements. MEC is a status test rather than a richness test. Excepted benefits are outside it, so standalone dental and vision, most fixed-indemnity policies, accident-only coverage, disability, workers' compensation, and short-term limited duration insurance do not count.
No, only the larger one. Offering MEC to at least 95 percent of full-time employees and their dependent children avoids the section 4980H(a) penalty. The second penalty still applies per employee when the coverage offered is unaffordable or fails minimum value, so MEC alone is half the analysis.
Because they satisfy the offer requirement while leaving employees exposed. A plan covering preventive services and little else can still trigger the affordability and minimum value penalty when an employee obtains a marketplace subsidy. Confirm in writing with your carrier or administrator whether a plan is MEC, provides minimum value, or both.