Benefits Buzz

Minimum Essential Coverage vs. Minimum Value

Posted on June 20th, 2014

Minimum Essential Coverage and Minimum Value are two terms that are mistakenly considered the same by many people, but in fact, these terms have different definitions. 

Minimum Essential Coverage is the type of coverage needed to satisfy the Individual Mandate requirements. The most common forms include the following health plans:

  • Employer sponsored coverage including COBRA
  • Individual market coverage (excluding short-term and mini-med plans)
  • Medicare
  • Medicaid

Minimum Value refers to a health plan that is expected to pay at least 60% of the total medical costs for a standard population. Bronze, Silver, Gold and Platinum plans sold in the individual and small group markets all meet or exceed Minimum Value. In addition, employees that are offered a health plan from their employer which is affordable and provides Minimum Value are ineligible for subsidies in the Exchange. 

Not all health plans that are classified as Minimum Essential Coverage provide Minimum Value. For example:

  • Retiree Health Reimbursement Arrangements (HRAs)
  • Grandfathered health plans may not necessarily provide Minimum Value (if the plan has a really high deductible)
  • "Skinny” plans or “bare-bones” plans that large employers might offer to avoid certain penalties related to the Employer Mandate

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The materials contained within this communication are provided for informational purposes only and do not constitute legal or tax advice. 

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