Minimum Essential Coverage (MEC): Are you covered?

Make sure your employees, and your business, are in compliance.

According to the IRS, “the individual shared responsibility provision requires you and each member of your family to have basic health coverage – also known as minimum essential coverage – qualify for a health coverage exemption, or make an individual shared responsibility payment for months without coverage or an exemption when you file your federal income tax return.”

It is very important to determine whether you have qualifying health care coverage in order to ensure you don’t make an oversight that, in reality, could be a very costly mistake. 

Many individuals already have MEC (minimum essential coverage) through their employers or though government-sponsored programs. If you know that you are covered, you’ll need to be sure to report that coverage when filing this year’s tax returns. If you and your dependents have proper coverage for the entire year, simply indicate this on the proper forms on your return: Form 1040, 1040A or 1040EZ.

That being said, if you look back on the calendar year and realized that you did not have the proper health coverage at any point during 2016, you need to be on the look out early next year for forms you’ll receive regarding the coverage that you had or were offered during 2016. Although you don’t include these with your tax return documents, you do need to retain them for your records. Please note: for any month that you or anyone in your family does not have minimum essential coverage, you will need to claim or report a coverage exemption or make a shared responsibility payment when you file your tax return. 

Below are some examples that IRS.gov provides of coverage that 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
  • Self-insured group health plan for employees
  • COBRA coverage
  • Retiree coverage

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

Coverage under government-sponsored programs:

  • Medicare Part A coverage
  • Medicare Advantage plans
  • Most Medicaid coverage
  • Children’s Health Insurance Program, also known as CHIP
  • Most types of TRICARE coverage
  • Comprehensive health care programs offered by the Department of Veterans Affairs
  • Department of Defense Nonappropriated Fund Health Benefits Program
  • Refugee Medical Assistance

U.S. citizens, who are residents of a foreign country for an entire year, and residents of U.S. territories, are considered to have minimum essential coverage for the year.

If you have more questions, you can visit the Affordable Care Act Tax Provisions Questions and Answer section of the IRS.gov website for more information. If you’re a business and need to ensure you are offering the proper coverage to your employees, you can contact Sunkiko and work with our experts to ensure you’re in compliance.

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