What is “minimum essential coverage” and why do I need it?

Individuals with no coverage | Individual Responsibility Requirement (Individual Mandate) |

“Minimum essential coverage” refers to insurance that provides at least the “minimum” level of coverage, as defined by the Affordable Care Act (ACA). The ACA’s individual mandate requires people to maintain minimum essential coverage. Further, whether you have access to or are enrolled in a plan that qualifies as minimum essential coverage affects your ability to receive premium tax credits and whether or not you may qualify for most special enrollment periods.

The following types of coverage will allow you to comply with the individual mandate and qualify for most special enrollment periods if you lose it:

  • Employer-sponsored coverage, including COBRA continuation coverage and retiree coverage
  • Coverage purchased in the individual market, including a plan purchased through a state or the federal health insurance Marketplace
  • Grandfathered health plans, even if they do not cover services like prescription drugs
  • Medicare Part A coverage and Medicare Advantage plans
  • Most Medicaid coverage
  • Most Children’s Health Insurance Program coverage
  • Veterans health coverage administered by the Veterans Administration that are comprehensive
  • Most types of TRICARE (coverage for members of the military)
  • Coverage for Peace Corps volunteers
  • Refugee Medical Assistance from the federal Administration for Children and Families
  • Department of Defense health benefit program for civilian employees known as “Nonappropriated Fund” personnel
  • Certain self-funded student health coverage and other coverage may be recognized as minimum essential coverage—see this list

Insurers may provide individuals with a Summary of Benefits and Coverage, which uses a standard format to outline the benefits, cost sharing and coverage limits of plans. The Summary of Benefits and Coverage must also state whether the plan meets minimum value and counts as minimum essential coverage.

Some types of coverage sold outside a health insurance Marketplace do not qualify as minimum essential coverage, such as discount plans, short-term policies, or policies that cover only cancer. These kinds of products are sometimes referred to as “excepted benefits.” Coverage under these options will not satisfy the individual mandate nor the requirement to have coverage to qualify for most special enrollment periods. Further, you cannot use premium tax credits to purchase these plans.

If you are uncertain whether your plan qualifies as minimum essential coverage, for purposes of complying with the individual mandate, qualifying for a special enrollment period, or receiving premium tax credits, contact your employer’s human resources department or your health insurer. (26 U.S.C. § 5000A(f); 45 C.F.R. § 156.602.)

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