What is Minimum Essential Coverage?

The Affordable Care Act’s Individual Mandate requires most US citizens to have what’s called Minimum Essential Coverage. Government approved health insurance is now required for at least one day during at least 9 calendar months in any given year.

Since the 2015 tax season, Minimum Essential Coverage reporting has been a section on the Federal tax return. Failure to meet this important coverage requirement could subject you to a Shared Responsibility Payment or fee, both of which are official names for what is basically an Obamacare fine.

You can, however, avoid such a penalty by qualifying for an exemption or obtaining health insurance through other means such as an employer. Others will be covered through Medicare or Medicaid, both of which are considered Minimum Essential Coverage with few exceptions.

A short-term health insurance coverage gap, of less than 3 months, will not trigger an Obamacare penalty. Millions of US citizens every year, however, do pay a fine attributable to lack of Minimum Essential Coverage.

Minimum Essential Coverage in More Detail

Obamacare’s provision requiring a certain level of coverage means that your health insurance must meet very specific requirements. If you are buying new insurance outside the government exchanges then the insurer is required by law to inform you if the plan meets the definition of Minimum Essential Coverage.

Ask your insurer if your health insurance plan meets the strict ACA guidelines set by the Federal government. Failure to comply with the Minimum Essential Coverage mandate means, even if you have insurance, you could be subject to an Obamacare penalty.

Minimum Essential Coverage Standards

The Affordable Care Act sets very specific standards for what defines Minimum Essential Coverage. Plans must be renewable regardless of your health status. You can also never be denied coverage for any reason.

There can also be no limits of how much your insurers pays out over your lifetime or even annually. Patients cannot be charged more than a set amount based on age, family size and tobacco use. Finally, all Obamacare plans must cover at least 60% of out-of-pocket costs and there are limits on deductibles.

Health Insurance Plans that Qualify

The following is a list of health insurance classifications which are considered Minimum Essential Coverage under the Affordable Care Act. Having one of these plans will allow you to avoid an Obamacare fine:

  • Medicare Advantage plans
  • Medicare Part A coverage
  • Employer-sponsored coverage (including retiree & COBRA)
  • Children’s Health Insurance Program coverage (CHIP)
  • Nonappropriated Fund Health Benefit Program coverage
  • Refugee Medical Assistance program
  • Most types of Medicaid coverage
  • Peace Corps volunteers coverage
  • State high-risk pools for years beginning on or before December 31, 2014
  • Self-funded health coverage for university student for years prior to Dec 31, 2014
  • Coverage purchased in the individual market
  • Certain types of veterans health coverage

The above lists the main types of plans which are acceptable under the ACA’s laws. Any plan or arrangement that is recognized by the Secretary of HHS, in coordination with the Secretary of the Treasury is considered to be Minimum Essential Coverage.

Insurance Plans that Do Not Qualify

  • Dental-only or Vision-only plans
  • Worker’s Compensation plans 
  • Most Traveler or International plans
  • Any type of short-term plan

Try Our Obamacare Fine Calculators

If you expect that you won’t meet this coverage requirement then utilize our 2016 or 2017 ACA penalty calculator for determining your fine, if any.

Was this post helpful?