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What is Minimal Essential Coverage?

For purposes of the Employer Mandate, minimum essential coverage (MEC) is defined broadly to include any eligible employer-sponsored plan offered in either the small or large group market and includes grandfathered plans.

To be considered an offer of MEC, an employee must be given an effective opportunity to enroll in or decline coverage. However, an effective opportunity to decline is not required if the offer of MEC providing minimum value is offered at either: (1) no cost to the employee, or (2) if the employee’s required monthly contribution for the lowest cost self-only coverage does not exceed 9.5 percent (indexed annually) of the federal poverty line for a single individual for the calendar year, divided by 12.

If the employee’s required contribution is more, the employer should allow employees to decline coverage for any reason. If a waiver of coverage is conditioned upon proof or certification of other coverage, it makes it impossible for the employee to decline coverage for any reason. As a result, the employer can be treated as though it did not make an offer of MEC to these employees under the Employer Mandate, which could impact meeting the 95% threshold.

Additional information on what constitutes an offer of minimum essential coverage and waivers of coverage can be found in our Briefings linked below.

Additional Information

IRC §4980H Offer of Minimum Essential Coverage
     This Briefing explains what constitutes an offer of coverage under the Employer Mandate.

Issues to Consider with Waivers of Coverage and Cash-in-Lieu of Benefits
     This Briefing discusses issues with waivers of coverage and cash-in-lieu under the Employer Mandate.