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Small Business Employee Benefits and HR Blog

Does Our Small Business Health Insurance Count As Minimum Essential Coverage?

October 28, 2016
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The Affordable Care Act (ACA), otherwise known as “Obamacare,” states every American must carry minimum essential health coverage. People who choose to go without health insurance may pay a penalty during tax season. This might sound scary if you aren’t familiar with the terminology, but many insured people are already carrying minimum essential coverage, including those enrolled in small business health insurance. Understanding Minimum Essential Coverage and Small Business Health Insurance

What Is Minimum Essential Coverage?

Many existing insurance plans count as qualifying health coverage, commonly known as minimum essential coverage. 

Here are some examples of health insurance that counts as minimum essential coverage.

  • Employer-provided healthcare coverage (including small business health insurance)

  • COBRA coverage

  • Retiree coverage

  • Individual health coverage purchased through the ACA Marketplace or the individual market (tip: some short-term and limited coverage policies do not count as minimum essential coverage)

  • Student health plan coverage through a university

Coverage under government-sponsored programs:

  • Medicare Part A coverage

  • Medicare Advantage plans

  • Most Medicaid coverage

  • Children’s Health Insurance Program (CHIP)

  • Most types of TRICARE coverage under Chapter 55, Title 10 of the United States Code

  • Comprehensive health care programs offered by the Department of Veterans Affairs

  • Health coverage provided to Peace Corps volunteers

  • Department of Defense Nonappropriated Fund Health Benefits Program

  • Refugee Medical Assistance

Will I Have to Pay a Penalty?

As long as you can prove that you had insurance for the entire previous calendar year, you will not be charged the penalty (note: there are exceptions for short periods of not being insured).

Proof will come in the form of a tax document sent to you by either your employer or the insurance company through which you have coverage. If you were covered for most of the year, but not all, the formula goes as follows: (Full Penalty / 12) x the number of months you went without coverage.

Conclusion

Most insured people are already enrolled in qualifying health plans, including those covered by small business health insurance or those purchasing their own health insurance. Be sure to review the full list of qualified health plans when choosing a policy. A bit of extra planning now might save you money during tax season.

What questions do you still have about small business health insurance? Let us know in the comments below!

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