MEC is the type of health coverage individuals must maintain to satisfy the ACA’s individual mandate (federal penalty = $0). Several states (e.g., CA, MA, NJ, RI, DC) enforce their own individual mandates, with penalties for not maintaining MEC.
Examples of MEC
- All employer-sponsored group medical plans
- Individual market coverage (on- or off-Exchange, including Marketplace policies)
- Government programs: Medicare, Medicaid, CHIP, TRICARE, VA coverage, etc.
Not MEC
Excepted benefits and limited products, such as:
- Stand-alone dental or vision
- Accident-only coverage
- Workers’ compensation
- Disability income
- Coverage limited to a specific disease/condition
Employer Impact
Applicable Large Employers (ALEs) must offer group medical coverage (which qualifies as MEC) to avoid the 4980H(a) “no coverage” penalty – the penalty for failing to offer group medical coverage at all. In essence, group medical coverage = MEC.
- However, MEC is not limited to employer plans; individuals can also obtain MEC through the individual market (state Exchange or off-Exchange) or through government programs such as Medicare, Medicaid, CHIP, TRICARE, or VA coverage.