QUESTION

If I buy a plan outside the health insurance marketplace, how do I know it is minimum essential coverage so I don’t have to pay a tax penalty?

Individuals with no coverage | Comparing Plans: Benefits and Costs
ANSWER

To meet the coverage requirement, individuals must have “minimum essential coverage.” Most people that have health coverage today have a plan that will count as minimum essential coverage, and will not need to do anything more than continue the coverage that they have. If you have any of the following coverage, you likely have minimum essential coverage:

  • Employer sponsored coverage, including COBRA continuation coverage and retiree coverage
  • Coverage purchased in the individual market, including a plan purchased in a health insurance marketplace
  • Medicare Part A coverage and Medicare Advantage Plans
  • Most Medicaid coverage
  • Most Children’s Health Insurance Program coverage
  • Veteran’s health coverage administered by the Veterans Administration that are comprehensive
  • Most types of TRICARE (coverage for members of the military)
  • Self-funded student health coverage that began on or before Dec. 31, 2014 (for later plan or policy years, programs can apply to be recognized as minimum essential coverage, the list of approved plans is available here)
  • 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 “non-appropriated fund” personnel

If you don’t currently have coverage, will soon lose coverage, or are thinking of changing coverage, you can obtain minimum essential coverage by purchasing a plan on your state’s health insurance marketplace. You can also buy a traditional individual or family health insurance policy outside of the marketplace, but be aware that some types of coverage do not qualify as minimum essential coverage, such as short-term plans, discount plans, fixed indemnity plans, or plans that provide coverage only for a specific disease (i.e., cancer-only). Such plans are required to notify you if they don’t qualify as minimum essential coverage. If you receive such a notice, you may have to pay a tax penalty for not having adequate coverage.

If you are uncertain whether your plan qualifies as minimum essential coverage, contact your employer’s human resources department or your health insurer. (26 U.S.C. § 5000A).

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