What Employers Need to Know About Minimum Essential Coverage (MEC)

If you are an applicable large employer, ALE, you may have heard of minimum essential coverage (MEC). Which essentially means that if you reach a certain threshold, you are responsible for providing MEC. 

What Qualifies an Employer as an Applicable Large Employer?

This is taken straight from the IRS website, “If an employer has at least 50 full-time employees, including full-time equivalent employees, on average during the prior year, the employer is an ALE for the current calendar year, and is therefore subject to the employer shared responsibility provisions and the employer information reporting provisions”. If your company falls under this, continue reading for how to ensure your company is compliant. 

What is Minimum Essential Coverage?

Any insurance plan that meets the Affordable Care Act requirement for having health coverage. To avoid the penalty for not having insurance for plans 2018 and earlier, you must be enrolled in a plan that qualifies as minimum essential coverage (sometimes called “qualifying health coverage”). Examples of plans that qualify include: Marketplace plans; job-based plans; Medicare; and Medicaid & CHIP.

ALEs are required to provide full-time workers with minimum essential coverage that meets affordability and minimum value thresholds, and they face penalties for failing to do so. 

Penalties for Failure to Provide MEC

"The Section 4980H(a) penalty—the A penalty—applies when the ALE does not offer minimum essential coverage to at least 95 percent of its full-time employees in any given calendar month and at least one full-time employee receives a premium tax credit to help pay for coverage through an ACA marketplace exchange. Full-time employees are those who average 30 or more hours of work per week. The penalty is waived for the first 30 full-time employees."

Employers could end up paying fines up to $2,750 per full-time employee. Don't get caught up in this disaster of fees and penalties for failing to comply to the ACA's regulations. Consider choosing a payroll provider who automatically enrolls your employees into MEC so that you can focus on what's important, and that's running your business!