MEC Made Simple

The Basics

What is Minimum Essential Coverage (MEC)?

Minimum Essential Coverage is the minimum coverage a large employer must offer to at least 95% of its full‐time employees to SATISFY the “A” Tax Penalty imposed by ACA (IRC Section 4980H(a) and the minimum coverage most US Citizens must have to satisfy their individual mandate. It is not major medical or minimum value coverage and as such it will not satisfy the “B” Tax Penalty that may be imposed by ACA (IRC Section 4980H(b) for not offering Affordable Minimum Value Coverage.

The MEC plan Pan‐American Life administers only includes the minimum Preventive coverage required by law as long as services are rendered or performed by an in‐network provider.

MEC plans can be much more robust, as a matter of fact many of the individual and group major medical plans that were discontinued early on as a result of ACA would have been considered qualified MEC plans and as such it’s important when referring to PanaBridge Advantage or our MEC administered plan as a “Preventive ONLY MEC Plan”.

ACA Required Preventive Coverage

ACA requires most health plans to cover a set of preventive services — like shots and screening tests — at no cost to the covered member. The goal is to “prevent” a serious health condition by detecting problems early on.

IMPORTANT: These services are free only when delivered by a provider in the PPO Network.

There are 3 sets of free preventive services:

•            For all adults

•            For women

•            For children

MEC Plus PanaMed = PanaBridge

PanaMed is a Limited Benefit Indemnity Plan that pays fixed dollar amounts for specific medical services and care. These plans are structured/filed  as “excepted benefits”, and as such, are not subject to the Affordable Care Act’s (ACA’s) insurance market reforms. While it is not major medical or minimum value coverage, it does provide meaningful first dollar benefits as there are no copays, deductibles or pre‐existing condition exclusions.

2016 Large Employer ACA Tax Penalties

Large Employers (*51 or more full‐time equivalents) 2016 Tax Penalty(s):

“A” Tax Penalty = $2,160 (IRC Section 4980H(a) is assessed per full‐time employee, minus first 30 full‐time employees for failure to offer at least Minimum Essential Coverage (MEC). The Tax Penalty is triggered once the first full‐time employee qualifies for a subsidy.    Failure to comply would result in a monthly tax penalty of $180 per full‐time employee (minus 30 full‐time employees, assuming at least one employee qualified for a subsidy).

*Some States, such as CA define Large Employers as those with 100 or more full‐time equivalents.

Penalties are not a Tax Deductible Expense.

“B” Tax Penalty = $3,240 (IRC Section 4980(b), is assessed ONLY when an employer fails or elects not to offer an affordable MV plan (no more than 9.66% of the employee’s W2 wages) to at least 95% of its full‐time employees and an uninsured full‐time employee seeks coverage on the Marketplace and receives a subsidy.             This tax penalty is assessed at $270 for each month the individual is employed and is receiving the subsidy.   If they are covered on their employer sponsored health plan, they would not qualify for a subsidy, even if they could obtain better coverage at a lower cost on the Marketplace.

The potential tax consequences under IRC Section 4980H(b) [$3,240 per subsidized employee] are often less expensive than offering an MV plan, especially where the employer provides its employees meaningful benefits at low or no cost.

2016 ACA Individual Mandate Tax Penalties

For those individuals who are uninsured and do not meet one of the exemptions or hardship categories, the penalty for 2016 is calculated as the greater of two amounts:

·      A flat dollar amount equal to $695 per adult plus $347.50 per child, up to a maximum of $2,085 for the family.

·      2.5% of family income in excess of the 2015 income tax filing thresholds ($10,300 for a single person and $20,600 for a family).

2017 = Tax Penalty will increase by the rate of inflation going forward | or 2.5% of your household income that is above the tax return filing threshold for your filing status (whichever is greater).

Target Markets

  •         Agricultural: Crop and Dairy

•         Child Care: Day Care, Private Schools

•         Construction

•         Dry Cleaners

•         Food Processing and Packaging

•         Home Healthcare

•         Janitorial Supply, Maintenance and Maid Service

•         Landscaping

•         Manufacturing

•         Nursing Homes and Assisted Living Facilities

•         Restaurants: Fast Food, Casual & Fine Dining

•         Retail: Convenience Stores , Grocery, Department, Specialty

•         Security Firms

•         Service Industries: Hotels, Spas and Salons, Movie Theatres, Etc.

•         Staffing, Temporary and Employment Companies

•         Transportation/Trucking Companies

•         Companies with a long waiting period to join medical plan

•         Companies with High Deductible Health plans over $5K

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