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Minimum essential coverage is health insurance coverage that satisfies the Affordable Care Act‘s shared responsibility provision (individual mandate). Although there is no longer a federal penalty for not having minimum essential coverage, the individual mandate still exists and the concept of minimum essential coverage is still important.
There are several types of qualifying events that only trigger special enrollment periods if the person already had minimum essential coverage prior to the qualifying event. And some states have imposed their own individual mandates, with penalties for residents who don’t maintain minimum essential coverage.
Plans do not have to be compliant with the ACA in other to be considered minimum essential coverage, as there are plans that predate ACA implementation that still count as having coverage under the law.
Plans that qualify as minimum essential coverage include employer-sponsored plans, individual major medical plans (including new ACA-compliant plans, grandfathered plans, and grandmothered plans), TRICARE, Medicare, most Medicaid plans, and CHIP, among others.
Policies that are not major medical coverage and not regulated by the ACA do not count as minimum essential coverage. This includes discount plans, limited-benefit plans, critical illness insurance, accident supplements, and dental/vision plans.
Indian Health Services coverage on its own is also not considered minimum essential coverage, although Native Americans have access to year-round enrollment in the exchange (with zero-cost-sharing if income doesn’t exceed 300 percent of the poverty level), and were exempt from the ACA’s individual mandate penalty during the years that it was assessed.
Health care sharing ministries are also not considered minimum essential coverage, although their members were also eligible for an exemption from the ACA’s individual mandate penalty.
But the concept of minimum essential coverage remains important for special enrollment period eligibility: If a person experiences a qualifying event that would trigger a special enrollment period (SEP) for ACA-compliant coverage but only if the person already had minimum essential coverage, the SEP would not be triggered if the person’s prior coverage was via a health care sharing ministry. The same is true for people whose previous coverage was a short-term plan, fixed-indemnity plan, discount plan, etc.
However, there is an exception for people who have pregnancy Medicaid, CHIP unborn child, or Medically Needy Medicaid. These are not considered minimum essential coverage, but they do meet the prior coverage requirements when a person is enrolling in a health plan during a special enrollment period that requires prior minimum essential coverage. And the termination of coverage under pregnancy Medicaid, CHIP unborn child, and Medically Needy Medicaid will trigger a loss-of-coverage special enrollment period (for the mother as well as the baby, in the case of CHIP unborn child coverage).
The terms minimum essential coverage and minimum value both stem from the ACA, and are sometimes conflated. But they mean two different things. Minimum essential coverage, as described above, is coverage that satisfies the ACA’s individual mandate.
Minimum value, on the other hand, is a measure of whether a plan offered by a large employer provides adequate coverage. In order to provide minimum value, an employer-sponsored plan must
Large group plans (in most states, “large group” means 51+ employees) do not have to cover the ACA’s essential health benefits, and they do not have to fall into one of the ACA’s metal level ranges. The minimum value provision is instead used as the basic requirement that large employer plans must meet or exceed.
A large employer’s plan has to be both affordable and provide minimum value. If it’s not, and at least one employee obtains subsidized coverage in the exchange in lieu of the employer’s plan, the employer will be on the hook for the ACA’s employer mandate penalty.
Large employers are subject to the ACA’s employer mandate, which requires them to offer coverage to their full-time employees. The penalty for non-compliance is still in effect – only the individual mandate penalty was repealed. But there are two different penalty types under the employer mandate:
Depending on how many employees a company has, and how many of them end up seeking coverage in the exchange, the penalty can end up being significantly smaller if the employer offers coverage that doesn’t provide minimum value and/or that isn’t affordable for the employees (as opposed to not offering coverage at all).
Employer-sponsored coverage is, by default, considered minimum essential coverage. And small group health plans effective in 2014 or later are fully compliant with the ACA. But the waters can be murkier for large group plans. Most of them are robust, offering solid coverage that often exceeds the level of coverage people tend to purchase in the individual market.
But some large employers opt for skimpy plans that do not provide minimum value, knowing that they can dodge the (potentially larger) penalty they’d incur if they didn’t offer coverage at all. Employees who are offered these plans don’t always realize that the coverage is skimpy, and may not realize they’re eligible for a premium subsidy in the exchange (and if an employer’s coverage drops below the minimum value and/or affordability requirements mid-year, covered employees are eligible for a special enrollment period during which they can enroll in a plan through the exchange, with subsidies if they’re eligible based on income).
Sweeping health reform legislation delivered a long list of provisions focused on health insurance affordability, consumer protections.
Accident insurance pays cash benefits, up to a predetermined limit, if the policy holder experiences an accidental injury that’s covered by the plan. Accident insurance is designed to supplement major medical health insurance.