This is article 2 of our ongoing series about best practices while shopping for health insurance.
On of Jan. 1, 2014, the Affordable Care Act’s shared responsibility provision took effect and now most Americans must buy a health insurance plan. Not just any health insurance, however. It must qualify as minimum essential coverage.
Minimum essential coverage is basic major medical health insurance. Under the Affordable Care Act, minimum essential coverage must, among other things:
- Include 10 categories of essential health benefits
- Cover certain preventive care services at no additional cost
- Not deny applicants coverage or charge them more based on health history
- Extend dependent coverage through age 26
- Prohibit lifetime and annual limits on essential health benefits
Key differences among ACA-compliant health insurance plans lie in monthly premium rate, out-of-pocket expenses, provider networks and prescription drug formularies. While all plans must include the 10 categories of essential health benefits, the benefits within those categories can vary from state to state based on the state’s benchmark plan.
What qualifies, what doesn’t
Your state health insurance exchange and the federal marketplace are not the only places to buy minimum essential coverage. You can also buy it through the private marketplace using websites such as HealthCare.com. Additional examples of minimum essential coverage include the following:
- Job-based health insurance
- COBRA coverage
- Employer-sponsored retiree coverage
- Health insurance purchased directly from an insurance company
- Health insurance provided through a student health plan
- Medicare Part A
- Medicare Advantage
- Most Medicaid coverage
- Most types of TRICARE
Health insurance plans that provide limited benefits do not qualify as minimum essential coverage (e.g., standalone dental and vision, accident or disability income insurance, workers’ compensation insurance).
The Affordable Care Act permits individuals to experience a single gap in coverage of up to three months each year. If you fail to secure minimum essential coverage and do not qualify for an exemption, you may owe a penalty known as the shared responsibility payment. This payment is made when you file your federal income taxes the following year.
It is important to remember that you can only receive premium tax credits and cost-sharing subsidies when you buy minimum essential coverage through a state exchange or the federal marketplace. Shop websites such as HealthCare.com to learn about health insurance plans in your area, calculate your premium tax credit, and determine whether or not to buy coverage on or away from you state’s exchange or the federal marketplace.
If you need help selecting the right health insurance coverage or have questions about the shopping and enrollment process, call 877-275-0485 to talk to a licensed agent from one of our trusted insurance partners.
 Centers for Medicare & Medicaid Services. Center for Consumer Information and Insurance Oversight. “CIIO Sub-Regulatory Guidance : Process for Obtaining Recognition as Minimum Essential Coverage.” Oct. 31, 2013. http://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/mec-guidance-10-31-2013.pdf.
 Internal Revenue Service. “Individual Shared Responsibility Provision — Minimum Essential Coverage.” Last reviewed or updated Dec. 9, 2014. http://www.irs.gov/Affordable-Care-Act/Individuals-and-Families/ACA-Individual-Shared-Responsibility-Provision-Minimum-Essential-Coverage.
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