By William Rusteberg
Minimum Essential Coverage plans (MEC) have spawned due to a loop hole in PPACA that allows self-funded plans to offer preventive care benefits as the sole minimal essential coverage, thus avoiding a $2,000 punishment tax on each full time employee (minus the first 30). This tax dodge provides welcomed relief to some employers, especially those whose workforce are in such industries as construction, fast food, and hospitality services.
TPA’s and a few carriers were quick to seize this new marketing opportunity. One carrier is selling a self-funded MEC plan with a fully-insured attachment with a monthly cost of $100 per insured. The MEC provides preventive care only, and is insured through an aggregate stop loss policy. No commissions are paid on the MEC but are paid on the fully-insured component attached to the plan. Commissions are 30%, which equates, on average, to approximately $20 pepm. That is a very attractive commission to the selling agent.
TPA’s are loading up on fees to be charged through MEC’s too. We looked at one recently, and were amazed that anyone would buy it. The TPA administration fee to process preventive care claims is $25 pepm. Added to that were additional fees, such as $5.60 for a limited Rx benefit plus an additional $2.35 per prescription administration fee, $2.34 for telephonic access to a doctor, COBRA and HIPPA fee of $2.20 and, best of all, a $12.00 ACA Compliance Fee. All fees total more than $46.00 pepm. That’s higher than administering a full blown traditional health plan!
A plan sponsor willing to pay these exorbitant fees must be focusing on the tax savings as justification, while overlooking their fiduciary duties.