By David Barton
Founder, Shenandoah Valley Group
Employers are constantly searching for ways to better manage healthcare costs while providing competitive benefits to their employees. Many companies – large to small – have discovered that they have more power than they think when it comes to controlling their checkbook and MEC (Minimum Essential Coverage) plans have become a part of the solution.
MEC plans provide basic coverage for preventive care services and, for companies and organizations offering self-insured plans, can be tailored to meet budget and expense goals while giving employees plenty of options.
Growing Benefit Trends
In recent years, I have watched MEC plans become part of a growing trend as employers seek to control health benefit costs while providing competitive healthcare benefits. Just as 401K plans gained popularity over pension plans, major medical plans are now more often offered alongside an assortment of self-funded health benefit options, including MEC plans.
Employers are finding they can keep a better handle on costs without having to sacrifice the health needs of their employees.
MEC plans do not cover major medical expenses and hospitalizations, but major medical plans can still be offered as an additional option. The same is true for prescription drug plans. MEC plans cover some basic prescriptions, but more robust prescription plans can be offered separately, leaving flexibility for employees to pick and choose. That flexibility becomes an asset to both companies and workers. Not everyone wants major medical coverage, and many employees want the option to save money.
There really is no right or wrong answer to how health benefit plans are set up, that’s the bottom line. Self-funded plans put you in the driver’s seat, so you control your expenses without compromising on offering good benefits.
Here are a few things to consider about MEC plans.
- MEC plans are designed to provide basic coverage for preventive care services such as immunizations, wellness visits, and some screenings, which can be useful for people who are generally healthy and do not anticipate needing major medical services.
- MEC plans generally do not provide coverage for major medical expenses, such as hospitalization, surgery, and prescription drugs. They often are offered alongside a limited medical plan.
- For employers, offering a MEC plan as part of a larger benefits package can be a cost-effective way to provide basic coverage for employees.
- MEC plans can be a good option for some organizations, particularly those who have a generally healthy employee population. Because they offer minimal coverage, the cost is less than traditional group health insurance. The premiums can be paid by the employer, the employee or co-funded.
More Options, Better Choices
Self-funded plans like MECs have gained a significant foothold among popular benefit options.
Self-funded benefit plans are designed to keep you in control of benefits costs. You can set spending limits on benefits and make sure you don’t overpay hospitals and doctors by using what is known as reference-based pricing (RBP). Moving to a self-funded benefit plan may initially sound intimidating or like a time-consuming endeavor. But making this valuable shift is really just about how you want to control your checkbook. Health benefits administration, after all, is simply a bill-paying system.
There are regulations governing MEC plans that must be adhered to for compliance and are subject to employer mandates set by the Affordable Care Act (ACA). Minimum essential coverage is health insurance coverage that satisfies the ACA’s shared responsibility provision (individual mandate). Although there is no longer a federal penalty for not having minimum essential coverage, the individual mandate still exists and the concept of minimum essential coverage is still important.
Plans that qualify as minimum essential coverage include employer-sponsored plans, individual major medical plans (including new ACA-compliant plans, grandfathered plans, and grand mothered plans), TRICARE, Medicare, most Medicaid plans, and CHIP, among others.
The door is wide open for employers to offer more benefit options than ever and saving money both for your own business and for your employees is all about becoming educated on just how much control you really have.
For example, an employer could offer a MEC plan that costs $200 a month or, for employees who want a more traditional major medical plan, offer them a $200 credit towards their monthly premium.
Self-Funded Savings
I see so many employers making the mistake of only offering high dollar traditional health insurance plans with high deductibles to control costs. Consider that if employees don’t sign up because the plans are too expensive, you are putting them at risk. They may not be able to afford major medical plans. A MEC plan could be a great option and would provide basic coverage. That’s just one example as more and more options become available.
Self-funded plans put employers back in the driver’s seat and it does not have to be intimidating. For more than 15 years I have helped companies understand how to take advantage of all of the benefit options available to them and, most importantly, helped them manage benefit programs more efficiently and save money. I even help employers get prescription drug costs lowered and help them better communicate benefits to employees so they stay a step ahead of pricey renewal periods.
Check out the quick video below on what I do as a health benefit advisor. Set up a call with me and I am happy to walk you through how to take back control of health benefits offerings and feel confident about your options.