An employee or an employee’s family member who is qualified to enroll in employer-sponsored insurance that is “affordable” and provides “minimum value” is not eligible for a premium tax credit or ConnectorCare for any month in which the employee or family member could have enrolled in the employer plan. However, the disqualification does not extend to any required waiting period before employer-sponsored coverage becomes effective, or to family members who are not claimed as tax dependents by the employee.
Employer-sponsored coverage is “affordable” for purposes of the MEC definition if --
- The employee’s required premium contribution for the lowest cost selfonly coverage does not exceed a certain percentage of household income for the year;
- The required contribution percentage was 9.5% in 2014 but is adjusted annually. In 2019 the percentage is 9.86%.
- If the employer offers coverage to the employee’s family members, affordability for the family members is also based on the cost of self-only coverage for the employee not the often much higher costs of couple or family coverage. This is sometimes called the “family glitch” but the IRS has determined this is how it must apply the ACA unless Congress amends the law.
Employer-sponsored coverage provides “minimum value” if the plan’s share of the total cost of benefits provided to the employee are at least 60%. This provision will rule out plans with extremely high cost-sharing and deductibles; such plans are unusual for employer-sponsored plans in Massachusetts.
- Employees can learn whether their health plan meets minimum value by requesting a Summary of Benefits and Coverage (SBC) from their employer. The SBC is a required plan document and should clearly state whether the plan meets the minimum value requirement.
Individuals enrolled in employer-sponsored insurance. If an individual is actually enrolled in employer-sponsored insurance it is considered MEC regardless of affordability or minimum value or the fact that a family member is not claimed as a dependent by the employee.
Former employees. Eligibility for coverage as a former employee under a retiree, COBRA or mini-COBRA plan counts as MEC only in the months in which an individual is actually enrolled.
Health Reimbursement Accounts (HRAs) and Qualified Small Employer HRAs. Currently, federal rules address affordability of Qualified Small Employer HRAs but not HRAs generally, check the rules for more information.
26 CFR 1.36B-2(c)(3) (Employer-sponsored MEC); 1.36B-6 (minimum value); 1.5000A-2 (Minimum essential coverage).