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02/10/2015

What is Minimum Essential Coverage Under the Affordable Care Act?

The IRS has issued new information on how to interpret "Minimum Essential Coverage" under the Affordable Care Act.

Many individuals and businesses have been concerned about having the right kind of "qualifying" health care coverage for themselves and their employees.  Here is the latest notice about Minimum Essential Coverage from the IRS that may be helpful as 2014 federal income tax returns are being prepared and tax plans are being implemented for the 2015 tax year.  If it sounds complicated, it can be. If you have any questions or need to design a tax plan to cover this and many more important issues as you prepare your tax return, contact us and we'll help you with a confidential consultation to review all your options.  You may also consider using the services of a professional team like ours for your tax preparation needs.

 

Accountants workingIRS Release:

Individual Shared Responsibility Provision - Minimum Essential Coverage

The individual shared responsibility provision requires you and each member of your family to have qualifying health care coverage (known as minimum essential coverage), qualify for an exemption from the responsibility to have minimum essential coverage, or make an individual shared responsibility payment when you file your federal income tax return. If you are not required to file a tax return and don’t want to file a return, you do not need to file a return solely to report your coverage.

The chart shows some types of coverage that qualify as minimum essential coverage and some that do not.

Coverage TypeQualifies As Minimum Essential CoverageDoesn't Qualify As Minimum Essential Coverage

Employer-sponsored coverage:

  • Group health insurance coverage for employees under –
  • A governmental plan, such as the Federal Employees Health Benefit program
  • A plan or coverage offered in the small or large group market within a state
  • A grandfathered health plan offered in a group market
  • A self-insured group health plan for employees
  • COBRA coverage
  • Retiree coverage

 

Yes
 

Individual health coverage:

  • Health insurance you purchase directly from an insurance company
  • Health insurance you purchase through the Health Insurance Marketplace
  • Health insurance provided through a student health plan
  • Health coverage provided through a student health plan that is self-funded by a university (only for a plan year beginning on or before December 31, 2014, unless recognized as minimum essential coverage by HHS)
  • Catastrophic plans
Yes  

Coverage under government-sponsored programs:

  • Medicare Part A coverage
  • Medicare Advantage plans
  • Most Medicaid coverage
  • Children’s Health Insurance Program (CHIP)
  • Most types of TRICARE coverage
  • Comprehensive health care programs offered by the Department of Veterans Affairs
  • State high-risk health insurance pools (only for a plan year beginning on or before December 31, 2014, unless recognized as minimum essential coverage by HHS)
  • Health coverage provided to Peace Corps volunteers
  • Department of Defense Nonappropriated Fund Health Benefits Program
  • Refugee Medical Assistance
Yes  

Other coverage:

  • Certain foreign coverage
  • Certain coverage for business owners
Yes  

Certain coverage that may provide limited benefits:

  • Coverage consisting solely of excepted benefits, such as:
    • Stand-alone dental and vision insurance
    • Accident or disability income insurance
    • Workers' compensation insurance
  • Medicaid providing only family planning services*
  • Medicaid providing only tuberculosis-related services*
  • Medicaid providing only coverage limited to treatment of emergency medical conditions*
  • Pregnancy-related Medicaid coverage*
  • Medicaid coverage for the medically needy*
  • Section 1115 Medicaid demonstration projects*
  • Space available TRICARE coverage provided under chapter 55 of title 10 of the United States Code for individuals who are not eligible for TRICARE coverage for health services from private sector providers*
  • Line of duty TRICARE coverage provided under chapter 55 of title 10 of the United States Code*
  • AmeriCorps coverage for those serving in programs receiving AmeriCorps State and National grants
  • AfterCorps coverage purchased by returning members of the PeaceCorps

*In Notice 2014-10, the IRS announced relief from the individual shared responsibility payment for months in 2014 in which individuals are covered under one of these programs. See the instructions for Form 8965, Health Coverage Exemptions, for information on how to claim an exemption for one of these programs on your income tax return.

 

 

Yes

 

 

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