Passage and implementation of the Affordable Care Act (ACA) introduced the American healthcare system to a principle known as minimal essential coverage (MEC). In short, MEC is considered the minimum amount of health plan coverage a typical U.S. worker should have access to. Despite changes to the ACA as a result of the 2018 tax bill, MEC remains in force.
Under provisions of the ACA, most U.S. employers are required to offer employees group health benefits that meet MEC standards. This applies to traditional group health insurance programs, government programs, self-funded employer health plans, and health coverage purchased on the individual market.
Individual Mandate Eliminated
Getting back to the previously mentioned changes from 2018, the most prominent change was the elimination of the individual mandate. Prior to 2019, most working adults had to purchase a health plan that met MEC standards. Exemptions were available for consumers who truly could not afford coverage. For everyone else though, it was either pay for a health plan or face a financial penalty.
That penalty was eliminated by the 2018 tax bill. Technically, the penalty still exists as a matter of law. But the tax bill eliminated any means of enforcing the penalty. So for all intents and purposes, it no longer exists.
The most important aspect of this change is that it allows employees to choose less expensive health plans that might meet their needs just fine without adhering to MEC standards. That’s good because there are plenty of employees who are best served by low-cost health plans with minimal coverage. They don’t need or want more expensive plans offering coverage they will never use.
What It Means to You
So, what does this mean to you? It depends on your perspective. If you are an employee looking to enroll in an affordable health plan, you have plenty of options without having to worry about the ACA penalty. You can choose one of the plans offered by your employer or purchase your own plan on the individual market.
If you are an employer, you now have the ability to offer less costly health plans without worrying that employees who enroll in them will face the ACA penalty. Self-funded plans are now more attractive because they can be tailored to the particular needs of your workforce.
If you are a broker, you now have access to a full range of alternative health plans you can pitch to clients who aren’t interested in traditional group health insurance. This gives you the opportunity to expand your book of business beyond clients whose only interest is meeting minimum MEC requirements.
You Can’t Have Too Many Options
Whether one is in favor of the ACA or not, it is hard to argue against having too many options. The desire to give employers and employees as many options as possible was one of the driving factors behind establishing StarMed. We offer a viable alternative to traditional group health insurance. Our alternative product is offered at three different levels and price points. That way, employees have numerous choices to work with.
Healthcare and how it is paid for should never be approached from a one-size-fits-all perspective. One size does not fit all. People are different. So are their needs, their financial situations, and their healthcare choices.
MEC and ACA penalties notwithstanding, employees, employers, and brokers have more choices today than they did when the ACA was first implemented. We think that this is a good deal for everyone. MEC is not a bad concept on its face, but our system needs enough flexibility to accommodate everyone.
