According to the Affordable Care Act, health care that meets the lowest requirements is called a minimum essential coverage. Having minimum essential coverage is one way for taxpayers to avoid any penalties for not having health insurance. Without it, taxpayers may be fined for each month they’re without coverage, although the coverage gap exemption is available to those with up to three consecutive months of no Health Insurance.
The Affordable Care Act sets the standards for taxpayer’s health insurance requirements. Some types of health insurance plans follow each and every regulation set forth by the affordable care act, and some, known as minimum essential coverage, only meet the minimum requirements. Generally, these plans are based on the source of coverage instead of specific benefits.
Types of Health Insurance
In order to avoid penalties you’ll need to have minimum essential coverage. Some private insurances as well as many governments and employer sponsored health plans are considered minimum essential coverage. If you purchase Health Insurance through the marketplace, you’ll be covered and therefore avoid penalties.
These insurances typically qualify as minimal essential coverage:
- Coverage sponsored by an employer including retirement coverage and COBRA
- Plans purchased through the Health Insurance Marketplace
- Children’s Health Insurance Program
- Medicare Part A and Medicare Advantage plans
- Veteran’s Administration Plans
- Peace Corps volunteer coverage
- Coverage offered under the Non-appropriated Fund Health Benefit Program
- Refugee Medical Assistance supported by the Administration for Children and Families
- Self-funded coverage offered by universities to students for coverage beginning before December 31, 2014.
- State high risk pools for plans beginning prior to December 31, 2014.
Some Health Insurance plans offer limited coverage and do not qualify as minimum essential coverage. Some examples are those that provide only dental or vision coverage, or Medicaid benefits for family planning or disability only.
In many cases insurance plans offered outside of open enrollment are often short term, six benefit, or supplemental plans. There are no additional Health Care benefits, and if this is the only coverage a taxpayer has, then they can expect to be penalized at tax time. Other plans that don’t meet the minimum essential coverage guidelines are:
- Short Term Health Plans
- Fixed Benefit Health Plans
- Medicare Part D and Medigap
- Medicaid covering only certain benefits
- Vision only, Dental only, and limited benefit plans
- Grandfathered Plans (You won’t pay the penalty, but you also won’t be protected under the new regulations)
If you have any questions regarding whether or not your healthcare coverage meets the minimum requirements of the ACA, contact your provider.