MEC Plans Work
Printed with permissions: Benefits Pro
Employers hoping to avoid penalties under the Patient Protection and Affordable Care Act are increasingly turning to what some call a “no minimum value plan.”
These are group health plans – also often called “skinny” plans – that provide basic medical care, but may not satisfy the 60 percent minimum value threshold under the health care reform law. And despite that, they’re perfectly legal, at least for now.
Providing employees with “minimum essential coverage,” as mandated by the PPACA, leaves most workers with the impression that their company health plan will include the “10 essential benefits” outlined under the law.
That’s fairly comprehensive coverage. However, PPACA regulations require carriers to offer those 10 benefits only in plans meant for the individual and small-group marketplace. Companies with 50 or more full-time employers are not required to provide workers with this more-generous list of protections. Though still referred to as “minimum essential coverage,” large employers need offer workers only preventive services or other non-catastrophic coverage to comply with the law.
Such policies generally cost far less than paying the penalties under the law or providing more comprehensive benefits. These plans cost employers between $40 and $100 per month per employee.
“When the government created the phrase ‘minimum essential coverage,’ I don’t think anyone involved really understood how misleading that might appear to an employee expecting an adequate health plan,” said George Reardon, an attorney who specializes in staffing industry issues at Littler Mendelson, one of the country’s largest legal firms representing management in employment, benefits, and labor law issues. “It certainly sounds warm and fuzzy.”
The warm and fuzzy doesn’t last long because PPACA rules merely require large employers to provide workers with a “minimum value” health care plan that is “affordable.”For those needing a quick primer, minimum value means the plan covers at least 60 percent of the cost of all worker benefits covered by a moderately comprehensive plan. Employees would be responsible for the other 40 percent, which could include co-pays, co-insurance, or deductibles. (Various MV calculators dot the web and are available free to help employers calculate minimum value.)
And “affordable” means the plan cannot exceed 9.5 percent of an employee’s household income. Companies that offer all full-time employees a plan that is deemed unaffordable or falls short of MV will pay a penalty of $3,000 a year — but only for those full-time employees who reject the company-offered health plan, obtain coverage from a government exchange and qualify for a premium subsidy from the government.
Employers that decide not to offer “minimum essential coverage” to their full-time employees, sending them instead to the PPACA exchanges to find coverage, are subject to a $2,000 annual penalty for every employee.