A lot changed when the Affordable Care Act passed. Plans that were formerly low-cost and widely available were deemed unqualified and were hence discontinued by the health insurance companies. However, there are still health insurance plans out there that do not meet the minimum federal requirements. In order to avoid the hefty fees and penalties levied by the IRS, employers must be sure that the plans they offer their workers are MEC, or Minimum Essential Coverage plans.
What is an MEC Plan?
MEC means that the health insurance plan meets the minimum requirements set by the Affordable Care Act. Every individual must have an MEC plan for the entire year, except in very specific circumstances. Additionally, every employer with 25 or more workers has to offer an MEC plan to avoid the fines and penalties. These fines and penalties are assessed and collected by the IRS at tax time.
Since the new regulations are not easy to understand, many businesses are turning to the help of a PEO or Professional Employer Organization. A PEO is staffed with qualified specialists in employer health insurance plans, workers’ comp regulations, payroll, and other human resources related issues. The PEO can help businesses find and acquire health insurance plans that are MEC and meet the federal requirements so that the company is not liable for fees and penalties come tax time.
Health Insurance Coverage That Qualify as MEC Plans
Though employers have to verify each plan as MEC before investing, the government has issued some general guidelines to help employers and their PEOs find a plan to meet the requirements and suit the business’ needs. For example, most plans available from the government Marketplace meet the requirements to be MEC plans. Most insurance companies discontinued their plans that did not meet the minimum requirements, so most of the plans available from private insurance companies are also MEC plans. However, before investing in any employer plan, have your PEO verify that the plan is MEC and will allow you to avoid penalties and fines associated with non-compliance.
Health Insurance Coverage That Does Not Qualify as MEC Plans
There are also some general guidelines for determining if a plan is not qualified as MEC. For example, short-term health plans, fixed-benefit health plans, worker’s compensation insurance, plans that are limited to vision care or dental care, and plans that are designed to cover the insured for a specific disease or medical condition (such as cancer plans) are not considered MEC plans. While some of these are excellent benefits to offer employees in addition to their primary health care plans, these types of plans do not meet minimum essential coverage specifications and will not help the business avoid any fines and penalties levied by the IRS at tax time. It is important to verify any plan considered as MEC before investing.
As you see, most businesses need some help navigating the wide world of the Affordable Care Act and Minimum Essential Coverage plans. A PEO employs the specialists necessary to assure that any plan you select meets your needs and requirements. SourceOne Partners will provide a free PEO or payroll quote. Call 561-674-0748 or contact us for more information.