You may have heard the term minimum essential coverage, and you may know that it stems from theAffordable Care Act(ACA). But if you’re like most people, you might be wondering how it differs from other common terms, like “ACA-compliant coverage” and “minimum value.”
This article will explain what it means to have minimum essential coverage, why it matters, and how it differs from other similar terminology.
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What Does “Minimum Essential Coverage” Mean?
Minimum essential coverage (MEC) is defined as coverage that is deemed acceptable for fulfilling the ACA’sindividual shared responsibility provision—aka, the individual mandate. In other words, as long as you had minimum essential coverage in place from 2014 through 2018, you weren’t subject subject to the ACA’sindividual mandate penalty
Even if you didn’t have minimum essential coverage, you weren’t subject to the penalty if you qualified foran exemption, but that’s not the same as having minimum essential coverage. For example, people withhealthcare sharing ministry coveragewere exempt from the individual mandate penalty, but healthcare sharing ministry plans are not minimum essential coverage.
There is still an individual mandate, but there is no longer a penalty for non-compliance, unless you live in the District of Columbia, New Jersey, Massachusetts, California, or Rhode Island.
And it’s important to understand that coverage does not necessarily have to be ACA-compliant to be considered minimum essential coverage. In fact, some bare-bones health plans, that fall far short of ACA requirements, are specifically marketed to large employers as “MEC plans.”
What Counts as Minimum Essential Coverage?
There are a variety of plans that count as minimum essential coverage, and thus satisfy the ACA’s individual mandate. If you had one of the following types of insurance from 2014 through 2018, you were considered covered and not subject to a tax penalty for being uninsured.
And if you have one of them prior to one of the qualifying events that require prior coverage, you’ll be eligible for a special enrollment period:
Some types of minimum essential coverage are fullycompliant with the ACA, including individual/family and small group plans effective since the start of 2014.
As noted above, “skinny” plans that provide very little coverage are marketed to large employers as a way to minimize their exposure tothe ACA’s employer mandate penalty. Large employers that offer these “MEC Plans” are still potentially subject to a penalty, because these plans do not provide minimum value. But the penalty may be less than the penalty that would apply if they simply didn’t offer any coverage at all, and will never be more.
So the fact that your plan doesn’t meet the guidelines for ACA compliance, or pre-dates the ACA, does not necessarily mean that it’s not minimum essential coverage. If in doubt, check with your plan administrator to find out for sure.
What Does Not Count as Minimum Essential Coverage?
So plans that are designed to supplement other coverage, or to provide only limited benefits, are not considered minimum essential coverage.
If you rely on one of these plans as your sole coverage, you will not be eligible for a special enrollment period if you experience a qualifying event that requires prior coverage (most of them do). And you will likely be subject to theshared responsibility provisionif you live in DC, Massachusetts, New Jersey, California, Vermont, or Rhode Island.
Examples of plans that aren’t minimum essential coverage include:
Does Minimum Value Mean the Same Thing as Minimum Essential Coverage?
Minimum valueand minimum essential coverage are both terms that were introduced with the ACA. And although they sound similar, they have different meanings.
As described above, minimum essential coverage is coverage that fulfills the ACA’s individual mandate, and coverage that fulfills prior coverage requirements when a qualifying event requires prior coverage in order to trigger a special enrollment period.
Under the ACA, employers with 50 or more full-time equivalent employees arerequired to offer health insuranceto their full-time (30+ hours per week) employees.To comply with the employer mandate and avoid potential tax penalties, two basic rules apply in terms of the coverage itself:
Although small employers (fewer than 50 full-time equivalent employees) are not required to offer coverage, many of them do. And regardless of the size of the employer, if an employee is offered coverage that is considered affordable and that provides minimum value, the employee is not eligible for premium subsidies to offset the cost of an individual market plan in the exchange.
The employee’s family members may or may not be eligible for subsidies as of 2023. In prior years, they were always ineligible for subsidies if they were eligible for the employer’s plan and the employer’s plan was considered affordable for the employee alone. But thoserules were changed as of 2023, so it now depends on the household’s specific circumstances and how the cost of exchange/marketplace coverage compares with the household’s total income.
Large employers typically offer plans that provide minimum value, both because employer-sponsored plans have tended to be fairly robust, and because employers want to avoid the employer mandate penalty.
To be clear, employees who are offered these plans can decline them and potentially be eligible for Marketplace subsidies instead, whereas employees who are offered affordable coverage that does provide minimum value are never eligible for Marketplace subsidies.
Employer-sponsored coverage is also always considered minimum essential coverage, but it’s clear that the two terms have different meanings.
Minimum Essential Coverage Versus Essential Health Benefits
All individual and small group health plans with effective dates of 2014 or later are considered minimum essential coverage. And the small group plans are also compliant with the minimum value requirements. But as noted above, the scope of plans that are considered minimum essential coverage and that provide minimum value goes well beyond ACA-compliant individual and small group plans.
So the plans that are required to incorporate coverage for essential health benefits are also considered minimum essential coverage (and the small group plans also provide minimum value).
But there are plenty of plans that are considered minimum essential coverage that do not have to cover the essential health benefits. And large group health plans are not required to cover the essential health benefits (although most of them do), but are required to comply with the minimum value requirements to avoid an employer mandate penalty.
Summary
A Word From Verywell
If you have health insurance in the United States, chances are good that it counts as minimum essential coverage. There’s no longer an individual mandate penalty in most states, so you probably won’t be directly penalized for not having minimum essential coverage. But you’ll need it in order to be able to use a special enrollment period to sign up for new coverage (for example, if you move to a new area, you only get a special enrollment period if you already had minimum essential coverage in your prior location).
Regardless of the terminology, the important thing is to make sure that you and your loved ones are covered under high-quality health insurance. All high-quality plans count as minimum essential coverage, but not all minimum essential coverage is high quality. Most employer-sponsored health plans offer solid benefits, but some do not (they’re still considered minimum essential coverage, so you need to read the details of the plan to understand what you’re getting).
And there are numerous websites selling coverage that isn’t minimum essential coverage at all. So when you’re shopping for health coverage, be sure to ask lots of questions and read the fine print to make sure you understand what you’re buying.
27 SourcesVerywell Health uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read oureditorial processto learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.Internal Revenue Service.Individual shared responsibility provision - reporting and calculating the payment.Internal Revenue Service.Individual shared responsibility provision - exemptions: claiming or reporting.KFF.State actions to improve the affordability of health insurance in the individual market.HealthCare.gov.Special enrollment period (SEC).One Digital.The skinny on minimum essential coverage (MEC) plans.HealthCare.gov.Types of health insurance that count as coverage.Medicaid.gov.Basic health program.Norris, Louise. healthinsurance.org.The Affordable Care Act’s basic health program.Dr. Ellen Montz, Director, Center for Consumer Information and Insurance Oversight.Insurance standards bulletin series: extension of limited non-enforcement policy through 2023 and later benefit years.KFF.FAQ: grandfathered health plans.American College Health Association.ACHA advocacy initiative frequently asked questions.Centers for Medicare and Medicaid Services.Minimum essential coverage.Healthinsurance.org.Qualifying events that can get you coverage.Tricare.Continued health care benefit program.U.S. Department of Health and Human Services Office of Refugee Resettlement.Refugee medical assistance.HealthCare.gov.High-risk pool (state).Health Affairs Blog.Implementing health reform: excepted benefits final rule.Healthinsurance.org.Is short-term health insurance right for you?Idaho Administrative Procedures Act.18.04.16 – Rules governing short-term health insurance coverage.HealthCare.gov.Find out if your Medicaid program counts as minimum essential coverage.Corporation for National and Community Service.Health care options.Internal Revenue Service.Minimum value and affordability.Miller, Stephen.IRS raises 2021 employer health plan affordability threshold to 9.83% of pay.Internal Revenue Service.Revenue procedure 2022-34.Internal Revenue Service.Revenue procedure 2023-29.HealthCare.gov.Minimum value.KFF.Explaining health care reform: questions about health insurance subsidies.
27 Sources
Verywell Health uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read oureditorial processto learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.Internal Revenue Service.Individual shared responsibility provision - reporting and calculating the payment.Internal Revenue Service.Individual shared responsibility provision - exemptions: claiming or reporting.KFF.State actions to improve the affordability of health insurance in the individual market.HealthCare.gov.Special enrollment period (SEC).One Digital.The skinny on minimum essential coverage (MEC) plans.HealthCare.gov.Types of health insurance that count as coverage.Medicaid.gov.Basic health program.Norris, Louise. healthinsurance.org.The Affordable Care Act’s basic health program.Dr. Ellen Montz, Director, Center for Consumer Information and Insurance Oversight.Insurance standards bulletin series: extension of limited non-enforcement policy through 2023 and later benefit years.KFF.FAQ: grandfathered health plans.American College Health Association.ACHA advocacy initiative frequently asked questions.Centers for Medicare and Medicaid Services.Minimum essential coverage.Healthinsurance.org.Qualifying events that can get you coverage.Tricare.Continued health care benefit program.U.S. Department of Health and Human Services Office of Refugee Resettlement.Refugee medical assistance.HealthCare.gov.High-risk pool (state).Health Affairs Blog.Implementing health reform: excepted benefits final rule.Healthinsurance.org.Is short-term health insurance right for you?Idaho Administrative Procedures Act.18.04.16 – Rules governing short-term health insurance coverage.HealthCare.gov.Find out if your Medicaid program counts as minimum essential coverage.Corporation for National and Community Service.Health care options.Internal Revenue Service.Minimum value and affordability.Miller, Stephen.IRS raises 2021 employer health plan affordability threshold to 9.83% of pay.Internal Revenue Service.Revenue procedure 2022-34.Internal Revenue Service.Revenue procedure 2023-29.HealthCare.gov.Minimum value.KFF.Explaining health care reform: questions about health insurance subsidies.
Verywell Health uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read oureditorial processto learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
Internal Revenue Service.Individual shared responsibility provision - reporting and calculating the payment.Internal Revenue Service.Individual shared responsibility provision - exemptions: claiming or reporting.KFF.State actions to improve the affordability of health insurance in the individual market.HealthCare.gov.Special enrollment period (SEC).One Digital.The skinny on minimum essential coverage (MEC) plans.HealthCare.gov.Types of health insurance that count as coverage.Medicaid.gov.Basic health program.Norris, Louise. healthinsurance.org.The Affordable Care Act’s basic health program.Dr. Ellen Montz, Director, Center for Consumer Information and Insurance Oversight.Insurance standards bulletin series: extension of limited non-enforcement policy through 2023 and later benefit years.KFF.FAQ: grandfathered health plans.American College Health Association.ACHA advocacy initiative frequently asked questions.Centers for Medicare and Medicaid Services.Minimum essential coverage.Healthinsurance.org.Qualifying events that can get you coverage.Tricare.Continued health care benefit program.U.S. Department of Health and Human Services Office of Refugee Resettlement.Refugee medical assistance.HealthCare.gov.High-risk pool (state).Health Affairs Blog.Implementing health reform: excepted benefits final rule.Healthinsurance.org.Is short-term health insurance right for you?Idaho Administrative Procedures Act.18.04.16 – Rules governing short-term health insurance coverage.HealthCare.gov.Find out if your Medicaid program counts as minimum essential coverage.Corporation for National and Community Service.Health care options.Internal Revenue Service.Minimum value and affordability.Miller, Stephen.IRS raises 2021 employer health plan affordability threshold to 9.83% of pay.Internal Revenue Service.Revenue procedure 2022-34.Internal Revenue Service.Revenue procedure 2023-29.HealthCare.gov.Minimum value.KFF.Explaining health care reform: questions about health insurance subsidies.
Internal Revenue Service.Individual shared responsibility provision - reporting and calculating the payment.
Internal Revenue Service.Individual shared responsibility provision - exemptions: claiming or reporting.
KFF.State actions to improve the affordability of health insurance in the individual market.
HealthCare.gov.Special enrollment period (SEC).
One Digital.The skinny on minimum essential coverage (MEC) plans.
HealthCare.gov.Types of health insurance that count as coverage.
Medicaid.gov.Basic health program.
Norris, Louise. healthinsurance.org.The Affordable Care Act’s basic health program.
Dr. Ellen Montz, Director, Center for Consumer Information and Insurance Oversight.Insurance standards bulletin series: extension of limited non-enforcement policy through 2023 and later benefit years.
KFF.FAQ: grandfathered health plans.
American College Health Association.ACHA advocacy initiative frequently asked questions.
Centers for Medicare and Medicaid Services.Minimum essential coverage.
Healthinsurance.org.Qualifying events that can get you coverage.
Tricare.Continued health care benefit program.
U.S. Department of Health and Human Services Office of Refugee Resettlement.Refugee medical assistance.
HealthCare.gov.High-risk pool (state).
Health Affairs Blog.Implementing health reform: excepted benefits final rule.
Healthinsurance.org.Is short-term health insurance right for you?
Idaho Administrative Procedures Act.18.04.16 – Rules governing short-term health insurance coverage.
HealthCare.gov.Find out if your Medicaid program counts as minimum essential coverage.
Corporation for National and Community Service.Health care options.
Internal Revenue Service.Minimum value and affordability.
Miller, Stephen.IRS raises 2021 employer health plan affordability threshold to 9.83% of pay.
Internal Revenue Service.Revenue procedure 2022-34.
Internal Revenue Service.Revenue procedure 2023-29.
HealthCare.gov.Minimum value.
KFF.Explaining health care reform: questions about health insurance subsidies.
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