"Minimum essential coverage" and "minimum value" are two different federal tests. They come up whenever an employer wants a precise reading of what a medical plan is — and they matter most for applicable large employers under the Affordable Care Act's shared-responsibility rules. They are also the right vocabulary for limited medical plans, sometimes called MEC plans or MEC-plus plans, that some employers offer as one option in a benefits package.
This page defines the tests and describes how we use them. It is not tax or legal advice, and it is not a recommendation to use any design as a way to avoid a legal duty.
What it is
Minimum essential coverage (MEC) is the statutory category of coverage described in Internal Revenue Code § 5000A(f) and in CMS materials on minimum essential coverage. Employer-sponsored coverage is one of the types that can be MEC, along with specified government coverage and other listed categories. When people say a plan is a "MEC plan," they usually mean a medical plan designed to be minimum essential coverage.
Minimum value (MV) is a separate test for eligible employer-sponsored coverage. Under 45 CFR 156.145, a plan provides minimum value if it covers at least 60 percent of the total allowed costs of benefits provided under the plan and provides substantial coverage of inpatient hospital services and physician services. That 60 percent figure is the same actuarial-value target used for a Bronze plan, but minimum value is its own test and includes the hospital-and-physician requirement.
For an applicable large employer — generally, an employer that averaged 50 or more full-time employees, including full-time equivalents, in the prior year — two shared-responsibility provisions in IRC § 4980H use these tests in different ways. One looks at whether the employer offered MEC to substantially all full-time employees. The other looks at whether the coverage offered to a given full-time employee was affordable and provided minimum value. The employer coverage requirement page, and the large-group and mid-size pages, walk through when those rules start to apply. Employers under that line are not subject to those employer shared-responsibility assessments.
Limited medical plans, sometimes called MEC-plus or "skinny" plans in the market, are medical products designed around these tests. Some are built to be minimum essential coverage. Whether a given plan also provides minimum value depends on its design, including whether it provides substantial coverage of inpatient hospital and physician services and meets the 60 percent standard. We will identify which tests a specific plan meets, in writing, before anyone relies on the label.
Who it fits
A full small-group or large-group major medical plan that includes essential health benefits, or that meets minimum value, is the usual starting point when the company's goal is comprehensive employee medical coverage. A limited medical or MEC-level plan can be a fit as one option in a benefits menu — for example, as an offer of employer-sponsored coverage alongside a richer plan, or for a class of employees under rules that allow different structures, including an ICHRA for another class.
We will match the design to the company's coverage goals and, if the company is an applicable large employer or close to that line, to a clear reading of the § 4980H tests. Employers below that line still benefit from knowing what they are offering, even though the shared-responsibility assessments do not apply.
How it works for employers
On a proposal we will state, for each medical option under consideration, whether it is designed as minimum essential coverage, whether it is designed to provide minimum value, and what that means for your situation. If a limited medical plan is on the list, it will be described in those terms, not as a generic "employee benefits plan."
Affordability, when it matters, is a separate calculation under the IRS rules for the year. We will not invent an affordability percentage or a savings figure on this page; official percentages are cited on the ICHRA and coverage-requirement pages when a revenue procedure has published them.
How it compares
A major medical plan in the small-group market is built on essential health benefits and a metal tier. A large-group or self-funded major medical plan is often designed to provide minimum value. A limited medical or MEC-level plan is a narrower design that may still be minimum essential coverage. An ICHRA or a QSEHRA is a defined-contribution reimbursement rather than a group medical policy. Each can be a legitimate part of an employer program when it is used for the role it is actually designed to play.
To review these tests against your census, request a proposal or call (813) 540-1299. Our agents are licensed in all 50 states. See also the group plan options page.Frequently asked questions
Is minimum essential coverage the same as minimum value?
No. MEC is a category of coverage. Minimum value is a test that looks at the plan's share of allowed costs and at inpatient hospital and physician coverage.
Do employers with fewer than 50 employees have to offer a minimum-value plan?
The ACA employer shared-responsibility rules apply to applicable large employers. Many smaller employers still offer major medical coverage, or a defined contribution, as a hiring decision. See the coverage-requirement page.
What is a MEC-plus or limited medical plan?
It is a medical plan designed around the MEC test, and sometimes around other design goals. Whether it also provides minimum value depends on the specific plan. We will read the plan, not the nickname.
Does a Bronze plan automatically provide minimum value?
Bronze is a 60 percent actuarial-value target in the individual and small-group markets. Minimum value is 60 percent plus substantial inpatient hospital and physician coverage. A given plan can meet both, but the tests are not identical.
Can we offer a limited medical plan and an ICHRA at the same time?
An ICHRA may be offered to one class while another class has a traditional group plan, subject to the class rules. The same class may not be offered a choice between an ICHRA and a traditional group plan. See ICHRA vs QSEHRA.
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