Minimum Essential Coverage


DEFINITION of 'Minimum Essential Coverage'

The type of health insurance policy an individual needs to meet health coverage requirements under the Patient Protection and Affordable Care Act (ACA), U.S. health reform enacted March 23, 2010. Individuals who do not maintain minimum essential coverage may have to pay a penalty in 2014 and beyond equal to 1% of their yearly household income or $95 per person ($47.50 for children), whichever is greater. The fee increases each year; for example, in 2015 the fee increases to 2% of income or $325 per person, and 2.5% of income or $695 per person during 2016, whichever amount is higher.

BREAKING DOWN 'Minimum Essential Coverage'

You are considered to have minimum essential coverage and won’t have to pay the penalty if you have:

  • Any health insurance plan sold on the Health Insurance Marketplace;
  • Any individual insurance plan you already have;
  • Any employer plan (including COBRA), including plans that are with or without grandfathered status and retiree plans;
  • Medicare;
  • Medicaid;
  • The Children’s Health Insurance Program (CHIP);
  • TRICARE (applies to current service members and military retirees, their families and their survivors);
  • VA Health Care Program, VA Civilian Health and Medical Program (CHAMPVA) and Spina Bifida Health Care Benefits Program; or
  • Peace Corps volunteer plans.

Coverage only for vision or dental care, workers’ compensation, coverage for a specific disease or condition, and plans that solely offer discounts on medical services do not count as minimum essential coverage under the ACA. Individuals who do not have minimum essential coverage may have to pay a penalty fee; however, certain people with limited incomes and other circumstances may be exempt from the fee. For example, you may not have to pay if you are uninsured for less than three months of the year, the lowest-priced coverage available to you costs more than 8% of your household income, or if you are not required to file a tax return because your income is too low. There are other exemptions, including hardship exemptions (for example, if you are homeless or facing foreclosure).

  1. Children’s Health Insurance Program ...

    A medical coverage source for individuals under age 19 whose ...
  2. Uniform Policy Provisions, Health ...

    A provision that states that insurance companies must use standard ...
  3. Universal Health Care Coverage

    An organized healthcare system that provides healthcare benefits ...
  4. Commercial Health Insurance

    A type of health insurance that covers medical expenses and disability ...
  5. National Organization Of Life And ...

    NOLHGA is a voluntary organization of U.S. life- and health-insurance ...
  6. Health Maintenance Organization ...

    An organization that provides health coverage with providers ...
Related Articles
  1. Insurance

    Affordable Care Plans: Bronze, Silver, Gold, Platinum?

    How to choose among the different coverage levels in the Health Insurance Marketplace. Which metal makes the most sense for you?
  2. Insurance

    Cutting Your Cost for Marketplace Health Insurance

    Here's how you may be able to lower your costs for health insurance coverage in 2016 though the Health Insurance Markerplace.
  3. Insurance

    Learn About the Health Insurance Marketplace

    2016 Open Enrollment is Nov. 1 to Jan. 31. Here are five things you should know about the Health Insurance Marketplace (AKA Health Insurance Exchange).
  4. Insurance

    What You Need To Know About COBRA Health Insurance

    We go through everything you need to know about COBRA so that you can decide if it's right for you.
  5. Home & Auto

    Concierge Healthcare: The Pros and Cons Of Having A Doctor On Call

    Concierge healthcare can mean extra attention from your doctor when you need it, but it isn't the best substitute for health insurance.
  6. Insurance

    How To Get Around The Health Insurance Marketplace Glitches

    When concussive maintenance fails you, we have the solution for working around the technical problems plaguing the Obamacare sign-up website.
  7. Fundamental Analysis

    Investing In Healthcare Facilities

    Read on to learn about how to value heathcare sector stocks.
  8. Investing Basics

    What Dividends Say About Stock Health

    Dividend payments may reveal information about the future prospects of a company.
  9. Personal Finance

    Comparing Health Savings And Flexible Spending Accounts

    When it comes to medical expenses, there are many accounts that provide tax advantages. We look at two commonly seen among employees.
  10. Insurance

    What You Need To Know About Student Health Insurance

    Before heading off to college, read up on health insurance plans.
  1. Is dental insurance tax deductible?

    Dental insurance premiums may be tax deductible. To be deductible as a qualifying medical expense, the dental insurance must ... Read Full Answer >>
  2. Does a Flexible Spending Account (FSA) cover massages?

    Flexible Spending Accounts (FSAs) cover massages for certain medical treatments. These treatments must be approved and prescribed ... Read Full Answer >>
  3. Does a Flexible Spending Account (FSA) cover Lasik?

    Flexible spending accounts (FSA) can be used to pay for qualifying LASIK procedures. LASIK is not the only laser eye surgery ... Read Full Answer >>
  4. Are Flexible Spending Account (FSA) expenses tax deductible?

    Flexible Spending Account (FSA) expenses are not tax deductible. The U.S. Internal Revenue Service (IRS) states you cannot ... Read Full Answer >>
  5. Does a Flexible Spending Account (FSA) cover acupuncture?

    A Flexible Spending Account (FSA) covers acupuncture. The Internal Revenue Service (IRS) has defined acupuncture as a qualifying ... Read Full Answer >>
  6. Do flexible spending accounts (FSA) funds roll over?

    An individual can utilize an employer’s cafeteria plan of employee benefits to establish a flexible spending account (FSA). ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Black Friday

    1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
  4. Quick Ratio

    The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet ...
  5. Black Tuesday

    October 29, 1929, when the DJIA fell 12% - one of the largest one-day drops in stock market history. More than 16 million ...
  6. Black Monday

    October 19, 1987, when the Dow Jones Industrial Average (DJIA) lost almost 22% in a single day. That event marked the beginning ...
Trading Center