The Final Countdown, Complying with ACA Mandates
November 9, 2014 – As we countdown to the end of 2014, the Obama administration has not yet revealed if there will be any delays to the implementation of the Affordable Care Act (ACA) for employers with 100+ employees. Currently, all the medical insurance carriers in Texas are jockeying for the uninsured businesses with baited breath. Although they may have solutions, the cost may be more than some construction employers will be able to absorb and still remain competitive. One of the solutions to this price problem is to offer an affordable option to ACA mandates with the Minimum Essential Coverage plan, also known as an MEC plan.
MEC plans, if placed properly, may be a perfect solution. MEC plans are self-funded and cover the minimum coverage required for preventative services by the ACA. If offered to the entire workforce and participation is met, the employer, in most cases, will escape the $2,000 penalty for each employee. This plan also qualifies the employee for the individual mandate, once enrolled. However, this still exposes the employer to a $3,000 penalty per employee if that employee applies and qualifies for a subsidy in the Federal exchange.
A Minimum Value Plan, also known as MVP, can be partnered with MEC plans to offer solutions to satisfy both the $2,000 and the $3,000 penalty. These complementary MVPs add benefits to the MEC plans while at the same time, the MVP meets the 60% actuarial value as set by PPACA to qualify for the $3,000 penalty exemption for employers. Keep in mind that both the MEC plan and the MVP have participation and contribution requirements.
Not all MEC plans are created equal. Each MEC plan carrier has different requirements for their products. Some MEC plans require 100% participation while other MEC plans have a participation requirement as low as 10%. There are a few MEC carriers requiring 100% contribution by the employer, on the flip side, some MEC carriers require no employer contribution. Participation is the key and one can argue if the contribution is too low by the employer, this could result in too little employee participation thereby resulting in a MEC plan not being in place. When there is no MEC in place, there is no proof that the employer ever offered the MEC plan, leaving the employer facing penalties once again.
To be in compliance for the ACA, the MEC plan must be self-funded. Be aware however, there are a few MEC carriers out there offering fully insured plans, it is of our opinion, these MEC plans are not properly following the guideline requirements as set forth by the ACA. Additionally, although the thought of self-funded plans may sound intimidating to some, finding the right MEC plan can provide protection to the employer and eliminate these concerns.
The clock is ticking ever so loudly for January 1, 2015. Will you be in compliance with all of the ACA mandates? There is no guarantee, but clarification for employers may come as soon as Labor Day. IBTX will keep you informed and updated, and if you have addition MEC or MVP questions you can contact us at 800.880.6689.