Passage of the Affordable Care Act (ACA) back in 2010 marked a watershed moment in the history of how Americans pay for healthcare services. One of the main provisions of the legislation is what is known as minimum essential coverage (MEC). Under the law, most employers have to offer a health plan that meets MEC requirements. But what does that mean practically?
It goes back to the ACA’s individual shared responsibility provision, a provision in the law requiring both employers and employees to participate. Employers have been required since 2014 to offer health plans that meet MEC requirements or pay a financial penalty. Until 2018, employees also faced a tax penalty for not obtaining healthcare coverage. The penalty was reduced to $0 beginning in 2018, effectively making the ACA’s individual mandate moot.
What Compliant Coverage Looks Like
The original premise of this post was what constitutes MEC for a given health plan. So let’s discuss what a compliant plan actually looks like. Below are ten broad categories of coverage MEC-compliant plans offer. Note two things: state laws may require different types of coverage under any of the categories, and the categories apply equally to both traditional group benefits and self-funded health plans.
With that said, the ten categories are:
- Lab services
- Emergency care
- Prescription medications
- Mental health services
- Maternity and newborn services
- Pediatric care
- Rehab services and devices
- Ambulatory services and devices
- Preventative medicine
- Hospitalization.
A health plan meeting MEC requirements provides coverage for each of the ten categories in some way, shape, or form. Details differ between health plans and the states in which they are offered. Companies are certainly not prohibited from offering additional coverage above and beyond what is required by MEC mandates.
MEC, Deductibles, and Copays
The idea behind minimum essential coverage is to ensure that employees have a way to pay for their medical care, whether that care is as minor as a well-child visit or the result of a major surgery. MEC provisions only dictate what must be covered by a health plan. The provisions don’t have any meaningful impact on deductibles and copays.
Applying deductibles to health plans make sense when you consider how we protect personal property. Your car insurance policy has a deductible. So does your homeowner’s policy. So whether one agrees with the deductible concept or not, it’s pretty common throughout the industry. We have just come to expect that our health plans will have deductibles attached.
Copays are another thing entirely. It has been said that copays were introduced to prevent people from taking advantage of their health plans by seeing their doctors unnecessarily. As the thinking goes, requiring a copay gives people pause about going to see the doctor for every little thing. Whether or not it is true is a matter of debate.
One thing we can say for sure is that most MEC-health plans have deductibles and copays attached. This is an important consideration whenever employers are looking for a new health plan. How much will a new plan cost them and their employees in real dollars and cents?
There Is an Alternative
Companies struggling to provide MEC through traditional group health plans should know there is an alternative. That alternative is an employee sponsored, self-funded plan through which MEC requirements can be met while costs are simultaneously contained.
StarMed is a third-party administrator of self-funded health plans. If you would like to know more about this option, reach out to us at your earliest convenience. We would be more than happy to discuss how our alternative health plan works in full detail.
