No employer wants to be forced to pay a hefty fine for failing to comply with the Affordable Care Act. As such, sometimes a broker’s job is to simply prevent that from happening. When that’s the case, minimum essential coverage plans can be one solution, said Leslie Miller, principal at Leslie Miller Custom Insurance Solutions.
“You just want to know what you’re trying to accomplish,” Miller said last week at EBA’s Workplace Benefits Summit in Orlando, Fla. If a client’s main concern is avoiding penalties, MEC plans offer brokers a “tactical and practical” approach to help employers get through 2016 and 2017 as efficiently as possible, she said.
Paying the fine for failing to offer coverage isn’t a good option, Miller said. “That’s a pretty big spend for nothing,” she said. MEC plans are inexpensive, Miller said, and can be a “good play for the right employer.”
The other penalty — when an employer offers health insurance but full-time employees go to the exchange and use a subsidy to purchase coverage — is nearly impossible to predict. Calculating an employer’s risk of incurring this penalty is difficult for brokers, since there’s no way to determine how many will do so. “You can’t help your employer s figure that out,” Miller said. “All you can do is model some tipping points.”
Another requirement brokers need to be aware of is that plans offer “substantial hospitalization,” however, the IRS hasn’t defined what that means, Miller said. To be safe, brokers should use a plan they know has in-patient hospitalization coverage so their employer clients can avoid the risk of non-compliance, she said.
Despite their basic design, MEC plans can result in a decent commission — about $5 per employee, per month, Miller said. “A lot of MEC plans have substantial compensation,” she said.
When discussing MEC plans, brokers should also offer gap coverage, such as critical illness or short-term disability, said Dan McNeill, business development, Beazley Group. This can help acquire new business, retain current groups and prevent other brokers from poaching clients, he said. “You have got to put a gap coverage solution on that spreadsheet,” McNeill said.
It’s not about being creative, Miller said. If an employer is considering a MEC plan, brokers should focus on compliance, cost and choice, she said.
The latter doesn’t vary much from carrier to carrier as far as what’s in the plan, Miller said. “They all offer the same coverage,” she said.
The difference is in the combination and administration of products, Miller said. “That’s really what you want to pay attention to,” she said.
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