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Small Business Employee Benefits and HR Blog

What is Minimum Essential Coverage?

June 9, 2014

Under the Affordable Care Act (ACA), "minimum essential coverage" is the type of coverage an individual needs to have to meet the individual shared responsibility requirement, also called the individual mandate. This includes individual market policies, job-based coverage, government-sponsored coverage, and certain other kinds of coverage.

This article helps clarify what coverage satisfies the individual mandate.

Qualifies as Minimum Essential Coverage

The following types of health insurance policies satisfy the individual mandate.

Employer-sponsored coverage:

minimum_essential_coverage
  • Employee coverage

  • COBRA coverage

  • Retiree coverage

Individual health coverage:

  • Health insurance you purchase from an insurance company directly

  • Health insurance you purchase through the Health Insurance Marketplace

  • Health insurance provided through a student health plan

  • Health coverage provided through a student health plan that is self-funded by a university (only for a plan year beginning on or before December 31, 2014, unless recognized as minimum essential coverage by HHS)

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

  • State high-risk health insurance pools (only for a plan year beginning on or before December 31, 2014, unless recognized as minimum essential coverage by HHS)

  • Health coverage provided to Peace Corps volunteers

  • Department of Defense Nonappropriated Fund Health Benefits Program

  • Refugee Medical Assistance

Does Not Qualify as Minimum Essential Coverage

The following types of policies do not satisfy the individual mandate.

Certain coverage that may provide limited benefits:

  • Coverage consisting solely of excepted benefits, such as:

    • Stand-alone dental and vision insurance
    • Accident or disability income insurance
    • Workers' compensation insurance
  • Medicaid providing only family planning services*

  • Medicaid providing only tuberculosis-related services*

  • Medicaid providing only coverage limited to treatment of emergency medical conditions*

  • Pregnancy-related Medicaid coverage*

  • Medicaid coverage for the medically needy*

  • Section 1115 Medicaid demonstration projects*

  • Space available TRICARE coverage provided under chapter 55 of title 10 of the United States Code for individuals who are not eligible for TRICARE coverage for health services from private sector providers*

  • Line of duty TRICARE coverage provided under chapter 55 of title 10 of the United States Code*

  • AmeriCorps coverage for those serving in programs receiving AmeriCorps State and National grants

  • AfterCorps coverage purchased by returning members of the PeaceCorps

* In Notice 2014-10, the IRS announced relief from the individual shared responsibility payment for months in 2014 in which individuals are covered under one of these programs. Source: IRS.

Additionally, most insurance types offered between annual open enrollment periods, such as short term health insurance, fixed benefit plans, and supplemental insurance will not satisfy the individual mandate fee on their own, although they will help you be covered health-wise.

See also: Why It's Not Too Late for Employees to Get Coverage on the Exchanges

 

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