Minimum Essential Coverage (MEC) plans: A creative solution for employers to offer an affordable benefit plan that complies with the Patient Protection and Affordable Care Act (PPACA) guidelines and avoiding all associated penalties.
What in the World are MEC Plans?
MEC Plans - The Nuts and Bolts
The WHAT of MEC Plans: A Minimum Essential Coverage plan, also known as a “MEC,” is a self- funded employer sponsored benefit plan that meets the most basic coverage guidelines required by the Affordable Care Act. It is comprised of dozens of preventative care and wellness benefits, primarily screenings and immunizations. A MEC plan is NOT traditional, comprehensive medical insurance through a well known carrier. For minimal additional costs a MEC plan can be boosted with benefits such as telemedicine coverage, a discount RX card, accident and critical illness coverage.
The WHY of MEC Plans: Effective January 1, 2016, any employer with more than 50 Full Time Employees is required to offer insurance coverage to all FTE's or face steep penalties. MEC plans offer employers the creative ability to comply with the PPACA while potentially paying much less for their overall medical benefit program.
The COST of MEC Plans: MEC plans are employer sponsored and the cost per employee is dramatically lower than that of traditional medical insurance. An employer will pay anywhere from $45 to $65 per employee to be covered under the basic MEC. For a 30 year old, an employer would be facing a minimum of a $250 monthly premium for the most inexpensive Bronze plan with most traditional carriers. The COST of not complying with the Patient Protection and Affordable Care Act (PPACA) is much, much higher.
1. Employer Mandate, Pay or Play, A Penalty: Any employer with 50 or more FTE’s must offer plans that meet Minimum Essential Coverage guidelines or pay $2,570 penalty per employee.
2. The Affordability/Minimum Value Penalty, B Penalty: Employers must offer a Qualified Plan that meets minimum value (60%) and the cost for an employee is no more than 9.78% of their income. Failure to comply incurs a penalty to the employer of $3,860 per employee who goes to exchange, enrolls in coverage and receives a subsidy.
3. The Individual Mandate: A nonexempt California resident who fails to maintain insurance may be subject to a state tax penalty. Click on READ MORE tab for penalty specifics.
The HOW of MEC Plans: In a perfect world, most employers would love to provide traditional comprehensive medical insurance for their valued employees and cover at least the 50% required premium. However, due to this high expense many organizations with over 50 FTE’s find it a necessity to seek a more affordable option while staying compliant with the ACA. Nearly half of all large groups are NOT compliant. Therefore, many employers take a more financially creative approach by utilizing a MEC plan. Typically, an employer would have as a base the MEC plan and also include in the benefits package an offer for a traditional small or large group comprehensive medical plan. The employee would have the opportunity to “buy-up” from the MEC to the comprehensive group health plan picking up some or all of the premium difference. The bottom line savings to the employer is enormous.
The MEC is employer sponsored and satisfies the Penalty A. The “Qualified Plan,” which would be the traditional group health plan or something similar, is considered in ACA terminology as a Minimum Value Plan (MPV). Simply offering the MVP plan that meets the necessary criteria enables the employer to avoid Penalty B. Either plan satisfies the Individual Mandate penalty requirements for the employee. For any uninsured employee that chooses decline the buy-up option for the richer and more expensive group plan, they would automatically put on the MEC plan. Employer covered; employee covered; employer savings are remarkable.
The WHO of MEC Plans: Beckworth Beneficial is your best choice for all things MEC. Having been in business since 1997, we’ve successfully navigated through the introduction and ongoing legislative changes to the Affordable Care Act. Our Third Party Administrators, back office support and cost transparency is second to none.
"Cost transparency is big for me. It obviously is for Beckworth Beneficial, too. Before I even asked, Sam showed us a cost analysis of our group benefits, especially our MEC plan. Sam saved us over 40% immediately on our monthly premiums, and that with expanded benefits. Our MEC plan per employee is below $40, and that includes Teledoc benefits.” Joseph B., Senior VP, Operations, Infinity Plumbing Designs, Riverside, CA - 300 employees