MEC Plans – A Tax Dodge Whose Time Has Come & Gone?


By Molly Mulebriar

Minimal Essential Coverage (MEC) plans are simply a tax dodge utilized by employers seeking to minimize the Affordable Care Act’s punishing mandates. By offering a MEC plan with essentially no benefits other than coverage for preventative care an employer can avoid the $2000 per year fine for every full time employee (minus the first 30).

For example, an employer with 230 full time employees who refuses to offer a comprehensive ACA compliant health insurance program, would be punished with a non-tax exempt fine of $400,000. That’s a lot less than paying, on average, $400 pepm or more for a comprehensive health plan, or about $1 million per year. However, by offering a MEC plan with an average cost of $50 pepm, the $400,000 punishment tax is avoided. And, to sweeten the pot, the employer is not even required to pay any part of the MEC plan.

An employee paid MEC plan, in this case, saves the employer $400,000 per year, year after year for as long as ObamaCare continues to be the law of the land.

That could change very fast under the Trump administration. Vowing to rescind ObamaCare, MEC plans may become less attractive to employers beginning in 2017.

TPA’s active in the MEC arena should take note and prepare for contingencies. TPAs, consultants and brokers would be wise to begin laying the foundation with their employer clients now before their competition takes the lead.