MEC versus MVP: Health Insurance Plans for Hourly Workers

Photo by JackF/iStock / Getty Images

Photo by JackF/iStock / Getty Images

MEC and MVP Plans are Both Favorable to the Hourly Workforce and the Employer

Working in an industry that deals with labor-intensive work, heavy employee turnover and hourly work rates can be a challenge, especially when it comes to managing health insurance benefits to employees. Rising costs and stricter requirements require a clear solution so that your company won’t have to worry about benefits-related compliance issues and the government fines or taxes that follow.

There are several things that you, as an employer, need to establish. At the very least, you should be able to compare and develop:

  • Employee eligibility
  • Appropriate and affordable medical coverage
  • Efficient plan administration
  • Compliance and legal knowledge

When it comes to compliance, the Affordable Care Act mandates that an employer must offer a Minimum Essential Coverage or MEC Plan, and a Minimum Value Plan (MVP). To help you choose a health insurance plan for your hourly workers, let’s break down these two concepts.

Minimum Essential Coverage or MEC Plan

An MEC plan covers 100% of the qualified preventative and wellness benefits. Evident from its name, this coverage is the minimum that the law allows for. It doesn’t include sick coverage, or health services in the event of a catastrophe. MEC plans can be cost-shared as well, depending on the carrier offering the plan.

By offering the MEC plan to your benefit-eligible employees, you can avoid being taxed a penalty per full-time employee, and the Individual Mandate penalty.

Minimum Value Plan or MVP

A minimum-value plan can help you meet coverage requirements and at the same time control benefits administration, compliance and claims. With an MVP, your offered coverage should meet the required ratio of allowed shared costs. The offered coverage should pay for at least 60% of the value of the benefit or service, which means the employee should only pay up to 40% of the value. Unlike the MEC plan, an MVP offers catastrophic coverage via hospitalization.

You also can’t charge any full-time employee more than 9.66% (meaning more than they can afford) of the safe harbor they use for the MVP coverage.

By offering an MVP, you can avoid the penalty tax per employee.

You need to work closely with a trusted benefits consultant to understand whether your plans can help you save costs, protect your employees and comply with existing government regulations. Archer Jordan can help you compare the two different plans and can help you in designing the most appropriate and affordable scheme for your company. Points of comparisons include:

  • Percent coverage or insurance – a fully-insured plan might cost you $250 per month, while a minimum-value plan can cost you only $150 per employee.
  • Billing frequency
  • Participation requirements and eligibility
  • Stop loss coverage

Contact ARCHER JORDAN for more info on MVP and MEC Plans

As a third party administrator providing fringe benefits to government contractors and hourly hires, we can help you reach that perfect compromise that can help you in compliance with the law and in protecting your employees. Contact ARCHER JORDAN today at +1 888-745-0754!

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