Minimum Essential Coverage (MEC)
vs. “MEC Plans,” Explained

Quick answer: “MEC” has two meanings. Minimum essential coverage is the ACA term for coverage that counts as having health insurance: Marketplace plans, job-based plans, Medicare, and Medicaid and CHIP qualify, but a fixed-indemnity plan doesn’t. A “MEC plan” is a low-cost employer plan built mainly around preventive care: it’s designed to count as minimum essential coverage, but it usually doesn’t pay for hospital stays or surgery, and a plan without substantial hospital and physician coverage doesn’t meet the federal minimum value standard.

Minimum essential coverage (MEC) is the ACA term for any plan that meets the law’s requirement for having health coverage — for example Marketplace plans, job-based plans, Medicare, and Medicaid and CHIP (HealthCare.gov). The federal penalty for going without it is gone: HealthCare.gov says that starting with the 2019 plan year, “the penalty no longer applies.” If your state has its own coverage requirement, check what counts there. MEC status still matters in two ways: losing minimum essential coverage is what opens the loss-of-coverage Special Enrollment Period (45 CFR 155.420), and if you’re eligible for certain types of minimum essential coverage, you may not be eligible for the premium tax credit. Coverage made up only of excepted benefits, such as a fixed-indemnity (fixed-benefit) plan, isn’t minimum essential coverage (26 CFR 1.5000A-2(g)).

A “MEC plan” is industry shorthand for a low-cost employer group plan built mainly around preventive services such as wellness exams, immunizations and screenings. Because it’s a job-based plan, it’s designed to count as minimum essential coverage. Most of these plans do NOT cover hospitalization, surgery, emergency room visits, or most prescription drugs, so a serious illness or injury leaves you paying most of the bill. A plan meets the federal minimum value standard only if it’s designed to pay at least 60% of the total cost of medical services and its benefits include substantial coverage of physician and inpatient hospital services (HealthCare.gov), so a preventive-only MEC plan doesn’t meet it.

Why employers offer MEC plans: under the ACA’s employer shared responsibility rules, an applicable large employer (an average of at least 50 full-time employees, including full-time equivalents) can owe the IRS a payment if it offers coverage to less than 95% of its full-time employees and their dependents and a full-time employee gets a premium tax credit. A MEC plan is a low-cost way to make that offer. A separate payment can still apply if the coverage offered is unaffordable or doesn’t provide minimum value and a full-time employee gets a tax credit (IRS). Employers comparing richer options can start with our group health insurance guide.

If your employer offers only a MEC plan: the offer doesn’t by itself stop you from getting a premium tax credit, because the IRS test is whether you were eligible for affordable employer coverage that provides minimum value (IRS). But you won’t qualify for Marketplace savings while you’re enrolled in a job-based plan (HealthCare.gov), so if you want a subsidized Marketplace plan, you’d generally need to decline the MEC plan.

If you’re shopping on your own, check your ACA Marketplace options first: Marketplace plans must cover pre-existing conditions, and the only way to get the premium tax credit is through the Marketplace. Compare full ACA plans →

Straight talk: A plan sold outside the Marketplace can cost less than a full-price ACA plan if you’re healthy, earn too much for a tax credit, or want a specific network. But if you qualify for a tax credit or Medicaid, have a pre-existing condition, are pregnant or planning to be, or take expensive medications, an ACA plan is usually the safer buy, and the only way to get the premium tax credit is through the Marketplace. We’ll price both side by side before you decide. Call (844) 788-3733.

These plans are not sold through the ACA Health Insurance Marketplace (HealthCare.gov or your state’s exchange) and are not individual-market ACA plans. You can’t use a premium tax credit or cost-sharing reduction to pay for them. As HealthCare.gov puts it, “the only way to get the premium tax credit is through the Marketplace.”