Certain employers don’t offer health coverage for their personnel because they can’t afford traditional employee benefits, whether it’s self-funded or fully insured.
At the same time, under the Affordable Care Act (ACA), many of those same employees work on average more than 30 hours per week and are considered full-time employees that companies need to offer benefits to — or face the employer mandate penalties.
In order to help fill this gap, third-party administrators (TPAs) and stop-loss carriers rolled out minimum essential coverage (MEC) and minimum value plans (MVP), says Abbe Mitze, account executive II at HealthLink.
“It’s an employer solution for satisfying the guidelines for not having the fines or excise tax imposed, a $2,000 or $3,000 penalty,” Mitze says.
Smart Business spoke with Mitze about MEC and MVP plans and the solutions they provide.
What exactly are MEC and MVP plans?
MEC only includes preventive care and wellness benefits. Applicable large employers can offer self-funded, low-cost MEC plans in order to avoid the $2,000 penalty. This penalty requires these large employers to provide group health insurance to ‘enough’ — a certain percentage of the total — of its full-time employees and dependents.
MVPs refer to the need to have a comprehensive health insurance plan with at least 60 percent actuarial value. In other words, the plan needs to pay at least 60 percent of the costs of claims submitted. These plans help employers avoid the $3,000 penalty for each employee who buys insurance through the government exchange.
Which companies would be a good fit for these types of plans?
Typical clients that would be in the market for this would be restaurants, hair salons, nursing homes, large car dealerships, etc. Basically, organizations that have low-paid employees who are borderline full time/part time could benefit.
For example, a company that rents out security officers to different organizations might have previously had a health plan carve-out that covered managers only and not their other 1,200 employees, who are now considered full time under the ACA. If they can’t afford a traditional employee benefit plan or to pay the penalties and fines, a MEC or MVP would be a good option.
Have MEC and MVPs been around long? What has been their history?
These plans were first rolled out in 2013. Most of them didn’t include hospital coverage because it wasn’t listed as an essential covered item.
However, last November, the government said that these plans needed to provide essential hospitalization coverage, but didn’t define what this actually looks like.
The TPAs and stop-loss carriers added hospitalization coverage — which isn’t as comprehensive as the traditional coverage in other health plans — and put these solutions back on the market.
This is important timing because the number of organizations that will be subject to the employer mandate, and more importantly the penalties and fines, is increasing in 2016.
If employers want to explore the possibility of getting MEC and MVPs, what else do they need to know?
You want to have a reputable broker that can educate you because it’s a new frontier. The plan requirements have already changed once, so you need someone who can stay on top of this, in case the government makes additional changes.
In addition, it’s important to make sure you’re looking for a standard plan, where all components of the benefit design fit into the actuarial calculator. MEC and MVPs come as both standard and nonstandard plans, but a certifiable standard plan is one that will hold up against the IRS and its fines.
Again, that’s why it’s important to consult with experts who can help you navigate through new territory.
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