When the Affordable Care Act (ACA) was first passed in 2010, it changed the landscape of health insurance throughout the country. One of the main goals of the ACA was to reduce the number of uninsured individuals in the country, so that more people would have access to affordable health care.

There have been many changes to the ACA in the years since, and many challenges to it as well, but it still remains in place today. Under the ACA, there are multiple mandates that qualifying employers must adhere to if they want to remain compliant.

In addition, individuals in the country are required to have health insurance that fits a standard known as Minimum Essential Coverage, or MEC. Below, we’ll discuss what MEC is and how it applies to employers and employees. Keep in mind that the following information is generalized and not a stand-in for determining compliance.

What is Minimum Essential Coverage (MEC)?

MEC is a term created by the ACA that refers to whether a health insurance plan meets certain minimum standards as outlined in the ACA. Also known as the individual mandate, MEC refers to whether a plan satisfies the shared responsibility provision of the ACT.

While individuals no longer face a federal fine if they don’t have MEC, there is still the individual mandate. From an employer and employee perspective, MEC is relevant for two main different reasons.

First, certain employers have to offer health insurance coverage according to the ACA, and those plans must meet MEC guidelines.

Second, employees will only be allowed to make changes to their health insurance coverage outside of open enrollment periods based on whether a qualifying life event has occurred.

What Plans Qualify as MEC?

The question, then, is what health plans meet the MEC requirement? Most health insurance plans offered by an employer as well as federal- and state-sponsored programs such as TRICARE, Medicaid, CHIP and Medicare all qualify as MEC.

Many major individual health insurance plans also qualify, including those offered through federal or state ACA health marketplaces. Included in the MEC are also “grandfathered” and “grandmothered” plans.

One thing to note is that a health insurance plan doesn’t have to be ACA compliant for it to be MEC. For example, there are some plans that began before the ACA was implemented that still count as having MEC per law. There are also some employer-sponsored plans that count as MEC, even if they don’t offer much more than baseline coverage.

Examples of plans that aren’t considered to be MEC include limited-benefit plans, travel medical insurance, dental and vision plans, short-term health insurance and critical illness insurance.

How Does MEC Affect Special Enrollment Periods?

Life can change quickly, and some of life’s major changes often necessitate changes to health insurance coverage. For example, major life events such as marriage and divorce, or having a child all bring about changes that typically affect health insurance coverage.

MEC plays a major role in determining whether these life events — and several others — allow someone to make changes to their health coverage under a special enrollment period.

Generally speaking, changes to health insurance plans can only happen once a year, at a predetermined open enrollment period. Special enrollment periods trigger, however, when certain qualifying life events occur, which gives people an opportunity to make changes to their plans regardless of whether it’s inside the open enrollment period or not.

That being said, special enrollment periods only trigger if at least one person involved had MEC before the qualifying life event happened. In the scenario of a marriage, for instance, one of the spouses must have had MEC before the marriage if they want to qualify for a special enrollment period.

If both spouses were subscribed to a non-MEC plan before the marriage, then they wouldn’t qualify for a special enrollment period to get coverage through an ACA-compliant plan.

Is MEC the Same as Minimum Value?

MEC and minimum value are often confused with each other. While they were both created by the ACA, they mean different things.

The MEC, as described above, refers to whether an individual has health care coverage or not. The minimum value refers to plans that employers offer their employees and whether they provide them with adequate coverage.

This is the employer side of the ACA mandate. To be compliant and have minimum value, a plan has to cover 60% or more of the average medical costs of people who are covered by a large group plan, and also provide “substantial coverage” for physician treatment and inpatient care.

Minimum value is an employer mandate that exists for all qualifying employers. Under the ACA, this refers to companies that have more than 50 full-time-equivalent employees.

Companies that don’t offer health insurance coverage that meets the ACA’s minimum value standard can face stiff fines and penalties.

Beckham Ellis Insurance Group Can Help You Create a Great Health Plan

MEC is an individual mandate that was created by the ACA, ensuring that every individual has a health care plan that meets certain standards. While the federal penalties for not having such a plan no longer exist, the MEC is still in place.

Employers also must adhere to certain standards according to the ACA, including the minimum value as described above. If you’re a qualifying employer, it’s important that you remain in compliance with the minimum value as well as all other ACA mandates.

By working with Beckham Ellis Insurance Group, you can ensure that you do so, and that the health insurance plan you offer is one that will help you attract and retain top talent.

To learn more, please contact us today.