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MEC as an Alternative to Group Medical Insurance

MEC as an Alternative to Group Medical Insurance

When the Patient Protection and Affordable Care Act, AKA Affordable Care Act (ACA) was signed into law in 2010 by then President Obama, both employers and employees were required to comply with the act.

By the time the act came into effect in 2014, most individuals were required to have Minimum Essential Coverage. The requirement applied to coverage for themselves and their dependents. Failure to meet the requirement would cause the taxpayer to have to pay additional taxes.

As of January 1st 2015, the Employer Shared Responsibility mandate required employers to offer their employees a health plan that was at least Minimum Essential Coverage. Failure to provide at least an MEC plan would expose employers to penalties ranging from $2,000 to $3,000 per employee.

The Fundamentals of ACA
  • Employers with 50 or more full-time employees were now required to offer affordable health coverage to at least 95 % of all their full-time employees.
  • The IRS would impose significant penalties when an employer:
    -Chose not to offer coverage ($2,000 penalty for each full-time employee); or
    -Provides a plan that fails to meet ACA minimum requirements ($3,000 penalty per employee who opts for, and a subsidy with Marketplace coverage).

All employers were required to offer coverage that is not just Minimal Essential Coverage but “Provides Value and is affordable” in order to avoid entirely any Employer Mandate penalties.

This was a rude awakening for many employers who were not offering their employees any type of health plan.

Coverage Offered By MEC plans

These plans are known as “skinny plans” and typically offer bare-bones health coverage. They usually offer preventive and wellness related tests and treatments. A pre-established number of doctor visits per year and generic drugs are typically offered along with other minor benefits. There is usually no hospitalization or specialized treatment other than what you would get at an urgent care facility or a doctor’s office.

Some employers who want to offer more comprehensive health coverage, offer a Limited Medical Plan option at additional cost to the employee, in conjunction with the MEC plan. This gives employees the option to have more comprehensive coverage at their discretion and if it is affordable for them. This is normally a better option than to go on their own and buy comprehensive standard health insurance. Of course, this works best for people who are healthy and are not prone to needing major medical care.

 

MEC Benefits For The Employer and Employees

 

Employers facing the need to comply with the ACA had to find a balance between providing adequate coverage under the act and the cost associated with offering such coverage.

One option was to offer a straight Minimum Essential Coverage plan for employees. One dilemma facing the decision to offer these plans is that although they meet the minimum requirement for the ACA to avoid the $2,000 penalty, they are not considered Qualified Health Plans and do not protect employers from the $3,000 penalty.

However, employers doing the math, estimated that due to the low cost to the employee for a MEC, most employees would buy the plan.

For the employee, this option of getting low-cost health insurance is much better than what they may have been getting in the past- no coverage. Additionally, employees could still opt to go to the exchange and shop for better coverage if they so desired.

The few employees who would not buy the plan and would get a subsidy through the exchange would be small enough to give employers room to pay those penalties and still cut overall costs. Additionally, reducing the number of claims against a self-funded health plan is another benefit of not offering such plans to employees.

In many cases, MEC plans are a win-win for both employer and employee. This option is particularly helpful to employers with lower wage employees such as retail, entertainment, restaurants, convenience stores and similar industries.

In Summary

 

While Minimum Essential Coverage plans may not meet the needs of those that are currently receiving standard Group Health Care plans, these plans do what the ACA act meant to do: Provide affordable health care to Americans. According to CNN, “some 20 million people have gained coverage under Obamacare (ACA)” and has touched practically everyone.

MEC plans have allowed scores of people in underserved industries to finally breathe a sigh of relief knowing they are not living life without at least the basics of health coverage for themselves and their families.

For more information regarding MEC Plans visit healthsharing.com, or call 1-800-948-4256, and speak directly with one of our qualified health insurance representatives.

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