What Is Minimum Essential Coverage?

The healthcare reform that has occurred since the implementation of the Affordable Care Act (ACA), or Obamacare, has changed the way most people think about and approach health care. It has also changed the vernacular to a degree.

For example, many people used to be concerned with preexisting conditions, or known health issues prior to enrollment in a new health plan that could lead to higher prices, restrictive policies, or even denial of coverage. These days, the term has become somewhat moot due to the fact that the ACA no longer allows insurance providers to discriminate based on preexisting conditions.

In addition, we’ve had to learn a slew of new terminology related to healthcare reform. Perhaps the most important term for anyone seeking health insurance under Obamacare is minimum essential coverage, and this term could be used in reference to two different mandates.

Minimum Essential Coverage for U.S. Citizens
Obamacare is designed to ensure that all U.S. citizens (and eligible residents) have access to affordable health care options. The law also requires, however, that all U.S. citizens maintain minimum essential coverage (as defined by the law) or face penalties for failure to do so.

In order to make this easy, the implementation of the ACA included the creation of the healthcare marketplace and subsequent state exchanges. Those enrolling in plans offered through the healthcare marketplace are guaranteed to get coverage that meets mandatory minimums.

Other plans through Medicare, Medicaid, TRICARE, and a variety of insurance programs are also likely to qualify as minimum essential coverage because these options originate with government entities. If, however, you elect to get health insurance on your own from a third-party (private) insurance provider, the onus is on you to make sure the policy you select meets standards for minimum essential coverage.

For example, catastrophic policies or those that are considered somehow supplemental may not meet minimum standards, in which case you could end up facing penalties for failure to maintain minimum essential coverage.

Minimum Essential Coverage for Insurance Providers
In truth, the term “minimum essential coverage” is targeted more toward the mandate for all U.S. citizens (and certain residents) to maintain appropriate health insurance coverage, while insurance providers are required to meet “minimum standards” for coverage. However, the term “minimum essential coverage” is often used interchangeably to describe both, although not necessarily in official ACA documentation.

Under ACA regulations, insurance providers are now required to meet standards for minimum essential coverage through the policies they provide. As part of this mandate, all policies must include coverage for preventive services considered to be essential to health and wellness, including certain screenings, immunizations, and wellness exams, just for example.

Employer Mandate
You might be worried about whether or not health insurance options offered through your employer meet standards for minimum essential coverage. The answer is almost certainly yes.

This is because many employers are now subject to the employer mandate under Obamacare, by which they must provide employees with health insurance benefits that meet mandatory minimums or face penalties themselves. The only exception is for companies with fewer than 50 employees – they are not required to provide any insurance coverage; if these employers do offer coverage it may not meet mandatory minimums.