What Is MEC And Why Should You Care?

Since the Affordable Care Act was written into existence, you may have heard the term “MEC” thrown around. How many of us have actually taken the time to learn what “MEC” means and how can it apply to our lives? Probably not many of us. So, let’s take a moment to consider “MEC” and its definition.

You’ll find that “MEC” applies to everyone. Whether you are a part-time or full-time employee, this is the priority when determining your healthcare needs. If you are the owner of an Applicable Large Employer, this will be key information when considering the healthcare plans that you offer to your employees.

Let’s Define MEC…

MEC stands for minimum essential coverage. This means that under the Affordable Care Act, health plans must meet a minimum level of coverage in order to be considered compliant. They must also be affordable based on the enrollee’s rate of pay.

The Affordable Care Act has sought to eliminate highly unaffordable plans as well as catastrophic plans. Catastrophic plans might have been considered affordable but the coverage that they offered was skimpy at best and they required excessive out-of-pocket costs. 

MEC Requirements Set By The ACA…

The ACA has strict requirements when it comes to healthcare plans. For example, the plan must have an “actuarial value” of 60% to reach the MEC requirement. This simply means that the plan must cover 60% of your healthcare needs, therefore you pay no more than 40% out-of-pocket. 

What Employees Should Learn About MEC…

If your employer is an Applicable Large Employer and you work for them on a full-time basis then they are obligated to offer you affordable health insurance. Since the individual mandate is no longer in place, you won’t have to pay a penalty for not having a healthcare plan.

The IRS basically wants to know that your employer made this offer to you and that you either accepted or declined the offer of health insurance. This is why they must report this information.

The main take-away is that your plan should meet the minimum essential coverage (MEC) standard. This means that you are getting a healthcare plan that is deemed fair in terms of the coverage that it provides you relative to the amount you are paying. 

What Employers Should Know About MEC…

Are you an employer of less than fifty full-time employees? If you answered yes, then you are not considered an Applicable Large Employer and therefore you are not required to report this information. If you have more than fifty full-time employees then you are required to file with the IRS. You are also required to mail a form 1095 C to all of your employees annually. Congratulations!

You must ensure that you are offering healthcare plans that meet MEC requirements. Otherwise, you will get hit with penalties left and right. If your employees are able to get a plan of the same value for a better price from the Healthcare Marketplace, your healthcare plans are NOT meeting the minimum required value.

This is a lot of information…what should you do with it? Check out ACAwise! Our reporting solution software can help you manage your data and keep you compliant with the IRS!


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