The Affordable Care Act (ACA) requires large companies (50 or more full-time employees) to offer healthcare coverage to at least 95% of their employees. Employers concerned about the high cost of traditional health insurance sometimes choose a MEC plan to satisfy the ACA requirements and avoid penalties without exceeding their budget.
First, let’s address the question, what is minimum essential coverage? This post will answer that question, explore the common details of MEC plans, compare MEC with minimum value and other coverage options, and help small and medium-sized companies choose the coverage that best serves their employees and their bottom line.
Understanding MEC Plans
MEC plans comply with Part A of the Employer Mandate in the Affordable Care Act, which requires Applicable Large Employers (ALEs) to offer coverage to at least 95% of full-time workers or full-time equivalents.
A MEC plan includes basic preventive care services like vaccinations and other health screenings. Companies typically offer a MEC plan to avoid the most significant ACA penalty, the “sledgehammer” penalty. The ACA fines are $2,900 per employee.
Do MEC plans meet the minimum value standard?
MEC plans do not typically meet the ACA Minimum Value standard, Part B of the Employer Mandate. The minimum value standard also requires that the plan:
- Is designed to cover at least 60% of the anticipated expenses for an average enrollee.
- Covers inpatient and outpatient care, emergency services, maternity care, and other specific conditions.
The penalty for employers offering coverage that does not meet the minimum value standard or the affordability standard is higher, at $4,350 per full-time worker. However, this penalty only applies to employees who qualify for a tax credit and obtain coverage through the marketplace.
Is there a risk to companies offering MEC plans?
Offering a bare-bones healthcare plan may send a negative message to current and potential employees. In the US, many workers rely on employer-based healthcare and consider it an essential benefit. The lack of an adequate health insurance program can make recruiting more difficult and cause employee dissatisfaction, leading to higher turnover.
For businesses with razor thin margins, it can seem like you’re stuck between a rock and a hard place. There’s increasing demand for health coverage, but it’s hard to find something that works for employees as well as your balance sheet.
How can an employer enhance coverage without overspending?
Employers combining a MEC plan with a Direct Primary Care (DPC) membership can offer enrollees a more robust care structure at a lower cost than traditional insurance. The MEC provides baseline coverage, including preventive care, annual checkups, and vaccinations, as well as ACA compliance. The DPC membership adds access to personal primary care and chronic condition management that employees are typically looking for with health coverage.
While this combination still has coverage gaps (such as treatment for significant conditions requiring surgery or hospitalization), it does offer an affordable alternative for small businesses. Vitable helps small businesses design attractive coverage approaches by combining MEC and MVP plans with a delightful DPC membership that includes telehealth, mental health support, access to free prescriptions, and more.
Gaining a recruiting and retention advantage
For most people, pay is the most important element of overall compensation. But a close second is health insurance. A recent employee survey conducted and shared by Fractl confirmed this preference, with 75% of respondents reporting that they give health benefits either “some” or “heavy” consideration when choosing an employer. The well-respected Society for Human Resources Management confirms that employees are more likely to stay with their employer if they like their health plan.
Education is key
Employers considering a combination of MEC and DPC for their employees should ensure they clearly communicate the advantages of this approach and disclose coverage details. A straightforward explanation will help employees decide whether it matches their needs. Employers can also simplify the enrollment process for their workers by facilitating access to the program information and administering payments.
Conclusion
Combining a Minimum Essential Coverage (MEC) plan with Direct Primary Care (DPC) membership offers a unique solution for employers and employees alike, addressing several key challenges:
- Cost-effectiveness: It provides a more affordable option than traditional comprehensive health insurance plans, helping employers manage their benefits budget.
- ACA compliance: The MEC component ensures employers meet the Part A requirements, avoiding the "sledgehammer" penalty.
- Enhanced primary care access: The DPC membership offers employees access to primary care services, including routine checkups, chronic condition management, mental health support and more, which aren’t typically included in a MEC plan.
- Transparency: MEC and DPC models provide clear information about covered services, reducing employee confusion and unexpected costs.
- Flexibility: This combination allows for customization based on the workforce's specific needs and the employer's budget constraints.
If you’ve been looking for a better MEC plan, look no further. Book a demo with Vitable to learn more.
