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We've updated one of our most popular materials. See what's new in our guide to MERPs.

Minimum Essential Coverage According to the Affordable Care Act

Obamacare Minimum Essential Coverage

How does minimum essential coverage work?

Under the Affordable Care Act, minimum essential coverage (MEC) is the type of coverage an individual needs to have to meet the Individual Shared Responsibility requirement, also called the Individual Mandate. The Small Business HRA also requires that employees have MEC if they would like to receive reimbursements tax-free.

Health insurance that qualifies as MEC includes individual market policies, job-based coverage, government-sponsored coverage, and certain other kinds of coverage.

Is my health insurance minimum essential coverage?Obamacare_minimum_essential_coverage_affordable_care_act

The following types of health insurance policies satisfy the Individual Mandate.

Employer-sponsored coverage:

  • Employee coverage

  • COBRA coverage

  • Retiree coverage

  • Individual health coverage (health insurance you purchase from an insurance company directly or through the Health Insurance Marketplace)

  • Health insurance provided through a student health plan

  • Health coverage provided through a student health plan that is self-funded by a university (only for a plan year beginning on or before December 31, 2014, unless recognized as minimum essential coverage by HHS)

Coverage under government-sponsored programs:

  • Medicare Part A coverage

  • Medicare Advantage plans

  • Most Medicaid coverage

  • Children’s Health Insurance Program (CHIP)

  • Most types of TRICARE coverage under chapter 55, title 10 of the United States Code

  • Comprehensive health care programs offered by the Department of Veterans Affairs

  • State high-risk health insurance pools (only for a plan year beginning on or before December 31, 2014, unless recognized as minimum essential coverage by HHS)

  • Health coverage provided to Peace Corps volunteers

  • Department of Defense Nonappropriated Fund Health Benefits Program

  • Refugee Medical Assistance

What isn’t Minimum Essential Coverage?

The following types of policies are not considered minimum essential coverage, and do not satisfy the Individual Mandate.

Certain coverage that may provide limited benefits:

  • Coverage consisting solely of excepted benefits, such as:

    • Stand-alone dental and vision insurance

    • Accident or disability income insurance

    • Workers' compensation insurance

  • Medicaid providing only family planning services*

  • Medicaid providing only tuberculosis-related services*

  • Medicaid providing only coverage limited to treatment of emergency medical conditions*

  • Pregnancy-related Medicaid coverage*

  • Medicaid coverage for the medically needy*

  • Section 1115 Medicaid demonstration projects*

  • Space available TRICARE coverage provided under chapter 55 of title 10 of the United States Code for individuals who are not eligible for TRICARE coverage for health services from private sector providers*

  • Line of duty TRICARE coverage provided under chapter 55 of title 10 of the United States Code*

  • AmeriCorps coverage for those serving in programs receiving AmeriCorps State and National grants

  • AfterCorps coverage purchased by returning members of the PeaceCorps

* In Notice 2014-10, the IRS announced relief from the Individual Shared Responsibility payment for months in 2014 in which individuals are covered under one of these programs. Source: IRS.

Additionally, most insurance types offered between annual open enrollment periods, such as short term health insurance, fixed benefit plans, and supplemental insurance will not satisfy the Individual Mandate fee on their own, although they will help you be covered health-wise.

What happens if I don’t have minimum essential coverage?

If you do not have minimum essential coverage, and do not qualify for an exemption, you'll pay an Individual Shared Responsibility fee at tax time. Additionally, reimbursements received through the Small Business HRA during a month not covered by MEC must be included in an employee’s gross income.

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