MEC & MVP- What They Mean for You
ACA Minimum Coverages
The insurance biz loves to use acronyms! While convenient for our everyday use, these three letter words hold a lot of meaning. If you’re navigating the ACA (another fun acronym), you must know the information below and how it applies to your business. As of right now (we'll see what changes come in 2017 given the election results), the ACA mandates for an employer to stay compliant they must offer Minimum Essential Coverage (MEC) and a Minimum Value Plan (MVP). So what does that really mean? Let’s break down what each plan does:
Minimum Essential Coverage (MEC)
A MEC plan must cover 100% of the Centers for Medicare & Medicaid (CMS) listed preventative and wellness benefits. This coverage is the minimum the law allows for and has absolutely no sick coverage. Here are some important facts on MEC:
- An employer that employs 100 or more Full–Time Equivalents (FTE) can avoid being taxed the part A penalty per full–time employee, minus 30 employees, by offering the MEC plan to their benefit-eligible employees.
- An employee can prevent being taxed the Individual Mandate penalty for not purchasing MEC by having this level of coverage.
- MEC plans can be cost shared depending on rules set forth by the carrier offering the plan.
- MEC plans don’t offer catastrophic coverage. Remember, preventative only.
- Of all the ACA compliant offerings, a carved out MEC plan is usually the most affordable option.
Minimum Value Plan (MVP)
Employers need to offer a MVP plan that meets the government’s shared responsibility provision requiring 60% actuarial value in order to avoid the part B penalty tax per employee. Here are some important facts on MVP plans:
- A MVP plan is a qualified bronze level plan.
- For 2016, the employer can’t charge any full-time employee more than 9.66% of whatever safe harbor they use for the MVP coverage.
- The 9.66% limitation applies exclusively to the employee-only rate of the MVP and not the charge for spouses or dependents
- The plan offers catastrophic coverage in the form of hospitalization.
- Most MVP plans have a deductible and function like a high deductible health plan with coverage kicking in once the deductible has been met.
While the plans themselves are pretty cut and dry, the carriers that offer them have a few differences that are important to question when purchasing these plans:
- Self-funded vs. fully insured
- Participation requirements
- Stop loss coverage
- Monthly vs. weekly billing
Now that you know the acronyms, count your FTEs, enroll them in a CMS approved MEC plan, offer them a MVP plan and successfully navigate your company through the ACA.
**Please note the ACA mandates may change. For all the latest be sure to check back as updates develop.
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