Under the Affordable Care Act (ACA), minimum essential coverage (MEC) is any health insurance coverage that meets the individual shared responsibility requirement, also known as the individual mandate. While the federal tax penalty for not having MEC is no longer in effect for individuals, MEC is essential for various employer-sponsored health benefits.
In this article, we'll explain which coverage types satisfy the individual mandate, what happens if an employee doesn't have qualifying health coverage, and which type of coverage works with benefits such as health reimbursement arrangements (HRAs).
In this blog post, you'll learn:
- The different types of ACA-compliant coverage you can offer.
- Examples of employer-sponsored insurance.
- The tax benefits that HRAs provide to employers and employees.
MEC is any insurance that satisfies the ACA's individual mandate. These plans generally cover the essential health benefits in Section 1302 of the ACA without annual or lifetime limits. However, as the federal government noted in 2020, Section 5000A of the Internal Revenue Code doesn’t require MEC plans to do so1. Finally, these health insurance plans must offer coverage to dependent children up to age 26 and meet the ACA's preventive services standards.
Various insurance options meet the individual mandate. So, you're bound to find coverage that meets your personal and family needs.
We'll cover three types of coverage that satisfy the individual mandate, as presented in Title 26, § 1.5000-A-2 of the Internal Revenue Code2:
Let's start with the option you're likely most familiar with: employer-sponsored coverage. This includes any group health insurance policy you got through your employer. According to KFF3, 154 million people under age 65 in the U.S. have health coverage through job-based plans.
Examples of employer-sponsored coverage include:
In addition to satisfying the MEC requirement of the individual mandate, employer-sponsored small group plans must generally cover the 10 essential health benefits (EHBs). Large group, self-insured, and grandfathered group plans don’t need to cover the 10 EHBs. However, if they do, they can’t place annual or lifetime limits on them4.
Next up is individual health coverage. This is any ACA-compliant insurance policy you purchased on your own through an exchange. Despite the name, individual coverage can cover your family. While group health insurance policies are the traditional choice for health insurance, individual policies have grown in popularity in recent years.
According to the Centers for Medicare & Medicaid Services5, 23.1 million people signed up for individual marketplace coverage during the 2026 Open Enrollment Period.
You can only sign up for a marketplace plan during Open Enrollment unless you have a qualifying life event (QLE). A QLE can create a special enrollment period (SEP).
Examples of individual health coverage include:
All individual health plans on the exchanges are considered qualified health plans. This means that they meet MEC standards and cover the 10 essential health benefits.
Finally, there's coverage under government-sponsored programs. Depending on your age, disability status, income level, military service, or other factors, you may qualify for an insurance policy at a reduced cost through the government.
Examples of coverage under government-sponsored programs include:
To qualify as MEC, an insurance policy must cover a minimum level of health needs. Any sort of coverage that provides only a “limited” set of benefits doesn't meet the individual insurance mandate.
Examples of coverage that may provide limited benefits include:
Additionally, most insurance types offered between annual Open Enrollment periods, such as short-term health insurance, fixed benefit plans, and supplemental insurance, don’t count as MEC and won't satisfy the individual mandate either.
Now that we’ve covered what does and doesn’t count as MEC in detail, here’s a simple chart to break down the differences.
|
Coverage type |
Qualified (counts as MEC) |
Disqualified (doesn't count as MEC) |
|
Employer-sponsored |
|
N/A |
|
Individual coverage |
|
|
|
Government programs |
|
|
|
Supplemental/Ancillary |
N/A |
|
When the federal government first introduced the ACA, Americans who didn't satisfy the individual mandate requirement received costly IRS penalties on their tax returns. As of 2019, the federal government no longer enforces individual mandate penalties. However, some states6 have their own individual mandates. If you don't live in a state that has an individual insurance mandate, you don't have to get an insurance policy that meets MEC if you don't want to.
Places with individual healthcare mandates include:
But there are still reasons to choose coverage that meets the individual mandate. While the federal government no longer requires it for general health insurance needs, there are certain HRAs and employer-sponsored health benefits that require you to have MEC to participate.
Participating in an HRA is an excellent way to offset your monthly premiums for health insurance and other eligible medical costs through your employer, all while enjoying tax-free benefits.
With an HRA, your employer can reimburse you for:
However, you need to have insurance with MEC to participate and receive tax-free reimbursements.
Two of the most popular stand-alone HRAs are:
The ICHRA is a formal health benefit available to organizations of all sizes. Employers can reimburse employees for more than 200 out-of-pocket costs, including monthly premiums for individual health insurance coverage.
As the name suggests, the ICHRA requires qualified individual coverage for employees to be eligible to participate. This coverage also needs to be MEC, but not all types of MEC will work with the ICHRA.
Acceptable insurance types under an ICHRA include:
An ICHRA isn't compatible with the following types of medical plan coverage, even if the plan provides MEC (as coverage must be qualified individual plans):
A QSEHRA is a formal employer-provided health benefit for organizations with fewer than 50 full-time equivalent employees (FTEs). Like the ICHRA, employers with a QSEHRA can reimburse their employees tax-free for their medical expenses, including individual monthly premiums for health insurance.
All full-time employees are automatically eligible to participate in the benefit if they have coverage that meets MEC, which includes coverage through a spouse’s or parent’s group health plan. Employers can also extend the benefit to part-time employees. If your employer reimburses you during a month when you didn't have MEC, you'll have to pay taxes on each product and service you get reimbursed through your QSEHRA for that month.
Which plans can a QSEHRA reimburse? Find out in our blog post.
Under the Affordable Care Act (ACA), minimum essential coverage (MEC) refers to any health insurance plan that satisfies the individual shared responsibility requirement. This is commonly known as the individual mandate. Although the federal tax penalty for lacking MEC no longer exists for individuals, having MEC remains crucial for multiple forms of employer-sponsored plans.
Understanding which types of insurance plans count as MEC is an important first step to choosing a policy that works best for you and your family, especially if you hope to combine your coverage with an HRA. Moving forward, you'll be ready to make smart choices about your insurance to get the coverage you need.
This blog article was originally published on June 9, 2014. It was last updated on April 14, 2026.