Minimum Essential Coverage And Voluntary Benefits: How The Affordable Care Act Applies
Posted on: 12 January 2016
Since 2014, the Affordable Care Act has given many more people in the United States access to health insurance. Nonetheless, if you don't have a plan that meets the Act's Minimum Essential Coverage (MEC) rules, you must apply for an exemption, or you will face a fee at the end of each tax year. Employer-sponsored voluntary benefits plans are increasingly popular with American workers, but some people are unclear if the Affordable Care Act applies to these plans. Learn how the MEC rules work, and find out how these regulations apply to any voluntary benefits your employer offers.
How Minimum Essential Coverage Works
MEC is a critical part of the Affordable Care Act. Without these rules, customers would have no guarantee that their insurance truly meets their needs, so the government robustly enforces MEC regulations. While there are many types of health insurance on the market, you normally have MEC if:
- You had health insurance before 2014 and your insurer confirmed it still meets the ACA rules.
- You bought new health insurance through the marketplace.
- You have coverage through a public program like Medicaid.
- Your employer pays for your coverage.
Plans that don't include the ACA's ten essential health benefits, plus any other mandatory protections, will not meet MEC requirements. For example, a compliant plan must include coverage that pays for your treatment if you need to visit the emergency room.
The role of voluntary benefits
The ACA's minimum essential coverage guarantees that you have access to care when you need it, but this type of insurance does not cover every possible situation. For example, an ACA-compliant plan must offer coverage for dental care for children under the age of 19, but dental benefits for anyone older are not compulsory.
As such, a voluntary benefits plan is an addition or a top-up that can give you extra protection over and above the coverage offered by your main medical insurance plan. Crucially, a voluntary benefits plan alone would not meet the requirements of the Affordable Care Act, but these plans are increasingly popular with people who want cover on top of the mandatory ACA requirements.
Voluntary benefits and out-of-pocket limits
To meet MEC requirements, your primary insurance plan must have a maximum out-of-pocket limit. This is the amount that you must pay towards the cost of your treatment. For 2016, this limit is $6,850 for an individual plan and $13,700 for a family plan.
Before the Affordable Care Act, there were no rules about out-of-pocket limits. As such, some people's injuries or illnesses could lead to bankruptcy because they couldn't afford the contribution they had to make as part of a health insurance claim. The new rules aim to stop this happening.
Nonetheless, $6,850 is still a reasonable sum of money for many single Americans. However, a voluntary benefits plan will often allow you to claim the cost of these expenses separately from your primary insurance. As such, these plans are increasingly popular with people who want to manage down the possible costs their treatment may incur.
The appeal for employers
Voluntary benefits are increasingly popular with American employers, as these plans can help attract and retain talented employees. Voluntary benefits plans are available to companies at a group-discounted rate, which allows employers to pass on the savings to their workers. As such, you benefit from the discount your employer can agree with an insurer, while your company doesn't have to pay anything towards this extra insurance.
Other things you should know
A voluntary benefits plan is a convenient way for you to pay for the insurance because your employer normally deducts the premium through your payroll. What's more, the deduction for a voluntary benefits plan comes out of your salary before tax, so you save even more.
A voluntary benefits plan will not interfere with your primary insurance, either. You can claim for eligible treatment under your primary insurance and/or through your voluntary insurance, where applicable. For example, your primary insurance may pay for treatment for an eye injury, but you may need your voluntary insurance to pay for glasses or contact lenses.
Voluntary benefits plans can supplement the insurance you must have according to the Affordable Care Act. Talk to your employer about the options available to you and different brands of benefits available, such as All About Voluntary.
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