The Affordable Care Act (ACA) is the comprehensive Health Care reform signed into law by President Barack Obama in March 2010. Formally known as the Patient Protection and Affordable Care Act—or simply Obamacare—the law includes a list of health-related provisions intended to extend health insurance coverage to uninsured Americans. Key Provisions:
Components of a MEC Plus Plan
1. Self-Funded Preventive Care aka MEC
The Affordable Care Act (ACA) requires plans to cover preventive care services while eliminating member cost-sharing (co-payments, deductibles, or coinsurance) for certain in-network preventive care services. It is recommended that plans offer excess loss coverage to limit the employers’ maximum liability, particularly Post COVID-19
2. Fully Insured Limited Indemnity Wraps
A limited benefit indemnity plan, coupled with a self-funded plan, offers complete coverage. These plans are fully customizable and designed to help cover the costs of employees’ everyday medical needs, paying a fixed benefit amount for medical events such as doctor’s office benefits, diagnostic tests and x-rays, hospitalization, emergency room, surgery, anesthesia, intensive care, and more.
To complement the plan, it should also include access to National PPO networks, hospital surgical, prescription drug benefits, medical accident coverage, advanced diagnostic testing, telemedicine and other ancillary benefits.
Targeted Markets
(Unskilled or Low Wage Hourly Employees)
· Food Services
· Assisted Living (Nursing Homes)
· Hospitality
· Agricultural
· Retail
· Travel Nurses
· Temporary Employees
· Maid Services
· Security Guards
These Plans Are NOT Intended to be Offered to Most Salaried Employees, However, They ARE Preferred by Low-Income Employees Due to the First-Dollar (no deductible) Coverage
Most employers and their consultants indeed have little (or no) experience with MEC (minimum essential coverage) MVP (minimum value plans) or related non-traditional coverage options. And even less of an idea of how to differentiate them.
All the more reason to have tools to evaluate these plans when you are confronted with them. I have made a career of evaluating and ranking MEC plans and I am happy to share the criteria I use.
Feel free to use these insights in any way you see fit, I encourage you to get me involved in the process, but it is not necessary. Good luck.
Three Most Common MEC Plan Models
Private Label (Aggregated Service) Plans – Inherently more costly. Why? These plans are developed and distributed by sales and marketing organizations. Not being insurance companies, these organizations have little to no in-house administrative capabilities. These plans must import or contract out for administrative and customer services. Because these vital services are contracted, and each partner entity must build in profit margin, they will always be more costly and less effective than internal carrier services from a single source health plan.
TPA Plans – As it is with the private label plans (above) TPAs must go outside for many of the built-in customer-related services that insurance carriers already have. In addition to the cost of importing services, our experience shows that a TPA will tend to overprice administrative services when they are linked to a MEC plan. It is our theory that TPA’s discovered early that you could double or triple normal per member fees when you connect these fees to a MEC product. In order to supplement the MEC preventive-only coverage, TPAs also must either contract with insurance carriers or self-fund them. Once the MEC Plus basic services are built out and margins are accounted for, the plans are more costly than a single platform insurance company-sponsored plan.
Beware of the TPA who sells the MEC only option. Although technically compliant with the employer mandate (4980H(a) This is the surest way to force employees away from company-sponsored plans and into a state/federal exchange. Two reasons for avoiding the MEC Only option (1) Exorbitant administration fees. Upwards of 70% of the cost
goes into fixed costs and profits for the TPA (2) A MEC Only option does little or nothing to curb turnover or employee loyalty since it provides only preventive services.
For brokers and agencies who target service industries with hourly wage workers.
William C Hammett
Location: Prescott, AZ 86303
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