Minimum Essential Coverage is the health care plan that meets the lowest requirements of the Affordable Care Act, and will help taxpayers avoid penalties assessed for not having insurance. Taxpayers must have minimum essential coverage during the tax year, or they can face a fee for each month that they aren’t covered. However, there is a coverage gap exemption for up to three consecutive months of non-coverage.
The Affordable Care Act is a complex new legislation which has set new standard for health insurance coverage, as well as protections for benefits and rights relating to insurance. There are several types of health insurance plans which are required to follow all of the regulations of Obamacare, while others don’t. The plans that are subject to the legislation are typically those known as minimum essential coverage, which is based on the source of the coverage as opposed to specific benefits.
Types of Health Insurance
You have to have minimum essential coverage if you want to avoid the penalties assessed at tax time. Most government and employer provided health insurance as well as some private insurances are minimum essential coverage. Most likely, if you were able to keep your current insurance for the year, or you purchased coverage through the marketplace exchange, or had employee sponsored or public program coverage then you have minimum essential coverage.
The following types of insurance are typically minimum essential coverage:
- Employer sponsored coverage including COBRA and coverage for retirees
- Coverage purchased through the Health Insurance Marketplace
- Medicare Part A and Medicare Advantage plans
- Medicaid coverage
- Children’s Health Insurance Program (CHIP)
- Insurance offered through the Veteran’s Administration
- Peace Corps volunteer coverage
- Coverage offered under the Non-appropriated Fund Health Benefit Program
- Refugee Medical Assistance supported by the Administration for Children and Families
- Self-funded coverage offered by universities to students for coverage beginning before December 31, 2014.
- State high risk pools for plans beginning prior to December 31, 2014.
Plans that Aren’t’ Covered
Health Insurance plans that offer limited coverage, such as those that provide only dental or vision benefits, as well as Medicaid that only applies to family planning or disability, do not qualify as Minimum Essential Coverage.
Generally, insurance plans offered at a time other than open enrollment are short term, fixed benefit, or supplemental plans. These plans may provide additional health care benefits, but you will be assessed a fee at tax time if they are the only coverage you have. Plans that don’t count as minimum essential coverage include:
- Short Term Health Plans
- Fixed Benefit Health Plans
- Medicare Part D and Medigap
- Medicaid covering only certain benefits
- Vision only, Dental only, and limited benefit plans
- Grandfathered Plans (You won’t pay the penalty, but you also won’t be protected under the new regulations)
You can check with your provider to ensure that your plan is ACA compliant.