Best Practices When it Comes to MEC

By Philip Cannon, Evolved Benefits

The MEC provision of the ACA mandates all health insurance plans to offer essential health benefits, ensuring access to basic healthcare services for all Americans regardless of their income or health status. Although MEC plans generally cover preventive care such as annual check-ups and vaccinations, they may not include other critical healthcare services such as prescription drugs, maternity care, mental health services, and hospitalization. This can be problematic for individuals requiring these services, as they may need to pay out-of-pocket.

It's important to note that MEC plans were never intended to replace Major Medical plans, but rather provide a more affordable healthcare option. MEC plans can be particularly appealing to groups with limited financial resources that may not be able to afford more comprehensive health insurance coverage. For example, if you work part-time or in a temporary position, you may not qualify for employer-provided health insurance or even individuals with limited financial means who are not about to afford Major Medical coverage, could consider a MEC plan as a viable alternative.

In addition to preventive care, MEC plans now offer access to a range of essential health services, including primary care, specialty care, behavioral health, urgent care, and prescription drug coverage. By providing employees with access to these critical health services, many MEC plans can help promote overall health and wellness, making them a valuable starting point for those looking to improve their healthcare coverage.

MEC plans can be an attractive option for groups seeking a cost-effective way to provide some level of healthcare coverage to their employees. Target industries often employ part-time, seasonal, or low-paid workers. These industries are particularly relevant as they tend to have a higher proportion of employees who may not have access to traditional full-time employment benefits, making them an ideal target for MEC solutions.

Some examples of target rich industries for MEC plans include: Security, Hospitality, Landscaping, Staffing, Trucking, Assisted Living Facilities, Housekeeping/Janitorial, Agriculture/Ranching, Construction, Manufacturing, Plumbing, Restaurants, Grocery Stores, Home Healthcare, and Cannabis.

If you’re an employee benefits advisor, there are key features to a MEC plan you should understand before presenting the plan to your clients including: administration, compliance, and financing. These are often overlooked, but are also the main source of misrepresentation of MEC plans in the market. For instance, MEC plans are frequently offered to companies with high turnover rates, if the third-party administrator (TPA) does not have adequate systems in place to handle the high volume of additions and terminations, it can result in poor customer service on both the group and employee levels.

Having a thorough understanding of the financial responsibilities associated with MEC plans is also crucial when considering them for your clients. MEC plans are self-funded solutions at their core, which means that a portion of the premium is dedicated to funding claim management. TPAs are responsible for managing claims and ensuring that they are processed correctly and promptly. Poor claims management can result in delayed payments to providers or even denied claims. At the end of the policy year, the TPA will "true up" the claim funding account for the employer, and if there is a deficit, the employer will be responsible for covering the difference. This can be challenging for employers, as it's difficult to budget for unforeseen expenses.

To help mitigate unforeseen exposure for groups with traditional self-funded MEC plans, TPAs can use stoploss policies to cover any additional deficit generated outside the claim-funded account. It's important to note any specifications or aggregate limits that would be the group's responsibility before these policies would kick in and cover the excess. Additionally, some TPAs have introduced captive arrangements as a form of self-insurance for a group of entities or a single entity to insure against a specific risk. Obtaining appropriate documentation is crucial to legally establish and ensure the effectiveness of such arrangements, thereby protecting the interests of the group.

As previously noted, MEC plans offer limited coverage and may not fully protect employees from out-of-pocket expenses related to uncovered services. However, as benefit advisors, we can help mitigate this exposure by offering various worksite benefits that can be paired with MEC plans to create a more comprehensive solution. By leveraging these additional benefits, such as hospital indemnity insurance, critical illness insurance, accident insurance, or short-term disability insurance, we can provide employees with a more well-rounded solution that helps them manage the financial impact of unexpected healthcare expenses. This approach not only helps protect employees but also demonstrates our commitment to providing a comprehensive benefits package that meets their unique needs.

In today's tough job market, especially for smaller employers who may not have the resources to offer more comprehensive health insurance plans, MEC plans can be a good tool for employers to help retain and recruit employees. By offering a MEC plan, employers can avoid penalties for non-compliance and provide their employees with basic health coverage, which can help improve employee health and wellbeing, reduce absenteeism, and increase productivity.

Philip Canon is Founder & Managing Partner of Evolved Benefits, a specialty General Agency that provides nationwide consulting and plan configuration to meet your needs and the needs of your clients—especially in niche markets. They specialize in Minimum Essential Coverage (MEC), Government Contractors and HCSO. Philip has dedicated his career to serving the employee benefits community and is known for developing products that become high performers in underserved markets.