Calculating ACA Penalties vs MEC Compliance Plans

Did you know that as a business owner failing to provide ACA-compliant benefits to your employees could result in significant annual fees? Furthermore, did you also know that in many cases providing MEC benefits to employees is less expensive than the fees and penalties you would be responsible for paying otherwise?

The Affordable Care Act (ACA) implemented requirements for business owners to provide full-time employees with medical benefits. They provide two methods to determine employee eligibility:

Monthly Measurement Method

In this method, employers count the number of hours of service for each employee per month in a calendar year. This method requires employers to consider an employee full-time if they total more than 130 service hours in a calendar year.

Look Back Measurement Method

This method of consideration looks to the future of an employee’s employment status. It assesses the stability period (the period of time looking ahead) and measures the predicted service hours per employee month over month.

In using one of these methods, business owners can determine which of their employees are entitled to receive health coverage. Eligible employees must either be provided health coverage that they can opt into or the business will be charged per eligible employee.

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There are two different penalty charges that businesses are responsible for in the event that they fail to provide adequate health coverage for eligible employees.

Penalty A

Penalty A will come into effect when employers fail to offer minimum essential coverage to 95% of their full-time employees and dependents. In order to avoid this penalty, you must determine who is considered a full-time employee, or full-time equivalent employee, and should be receiving benefits.

Penalty B

Penalty B occurs when employers that offer coverage to their full-time employees, offer coverage that does not provide minimum value or is considered a qualified health plan and at least one full-time employee receives a premium tax credit through the Health Insurance Marketplace.

We’ve made it simple to calculate the costs you can expect to be responsible for in fines and penalties should you fail to provide required coverage for eligible employees. Utilize our calculator below to estimate the associated costs based on the estimated number of full-time eligible employees that you have.

See how much you can save with MEC!

Minimum Essential Coverage (MEC) benefits are exactly what it sounds like. They are the minimum coverage to meet ACA requirements for eligible employees. Offering MEC benefits is an affordable and compliant way to provide coverage to all eligible employees and avoid ACA regulatory fees and penalties. This tool takes things one step further by comparing potential ACA penalties with the cost of providing MEC benefits to eligible employees.

Check out one of our latest blog posts for more information and details on the MEC plans offered by SBMA Benefits.