Minimum Essential Coverage vs. Minimum Value - What Is The Difference?

How do MECs apply to minimum value for health insurance coverage?

Let's dive in.

MEC stands for minimum essential coverage and MV stands for minimum value.

MEC stands at the lower threshold of minimum value because it only gives you access to basic health insurance coverage for acute services like primary care visits, specialist visits, urgent care, labs, x-rays, and prescription drugs.

The definition of minimum value (MV) states that the plan must cover at least 60% of the actuarial value of expenses that are allowed within any plan designed and offered to employees.

The employer mandate (under the Affordable Care Act) states that the plan cost to the employee cannot exceed 9.12% of the employee's income in 2023.

Here are two common questions I often receive about MEC plans:

Why does a broker need to offer these?

What's the difference between penalty A and B under the Affordable Care Act?

A MEC plan is going to cover penalty A. Penalty A states that an employer must offer at least minimum essential coverage to 95% of their full-time equivalents (FTE). If you offer a MEC plan you will avoid penalty A.

The minimum value is what covers penalty B. If an employer is not offering a fully-insured plan that covers at least 60% of the actuarial value, an employee is eligible for a premium subsidy if they apply for coverage individually.

An employer's failure to offer a plan of minimum value will trigger penalty B.

It's important to understand the details so you can help your clients avoid unnecessary penalties.

If you want more details or have any questions please reach out to me on LinkedIn.