23.01 Minimum essential coverage

In general.38 Minimum essential coverage means coverage under any of the following: Government-sponsored programs, eligible employer-sponsored plans, grandfathered health plans, individual health plans and certain other health-benefits coverage. Individuals and their tax dependents must have minimum essential coverage (MEC) to avoid the shared responsibility payment (penalty) imposed by the Internal Revenue Service unless they qualify for an exemption from this payment. See § 23.06 for details on the eligibility determination for MEC exemptions. In addition, individuals who are eligible to enroll in health coverage that qualifies as MEC under this section are not eligible to receive federal tax credits and cost-sharing reductions if they enroll in a QHP. See §§ 23.01(b) through 23.01(e) for details on health coverage that qualifies as MEC for purposes of considering eligibility for the federal premium tax credit. As stated in § 23.01(c)(2), for an employer-sponsored plan to be considered as MEC when an employee or related individual applies for APTC, the plan must be affordable and meet minimum value criteria. See § 23.02 for details on affordability, and § 23.03 for details on minimum value. See §§ 55.02(c) and (d) for descriptions of the process for verifying eligibility for MEC when determining eligibility for APTC and CSR. Government-sponsored MEC (1) In general.39 Subject to the limitation in paragraph (b)(2), an individual is eligible for government- sponsored MEC for purpose of considering eligibility for the federal premium tax credit if, as of the first day of the first full month the individual may receive benefits under the program, the individual meets the criteria for coverage under one of the following government-sponsored programs: (i) The Medicare program under part A of Title XVIII of the Act, except for an individual who must pay a premium for part A coverage and who chooses not to enroll in part A coverage (see § 23.01(e)(1)); (ii) The Medicaid program under Title XIX of the Act, except for the following individuals: A woman who becomes pregnant while enrolled in a QHP and who, though eligible for Medicaid as a pregnant woman pursuant to § 7.03(a)(2), chooses not to enroll in Medicaid (see § 23.01(e)(5)). An individual who becomes eligible for Medicaid coverage as medically needy only after meeting a spenddown. Such individual may apply to HHS for a hardship exemption from the personal responsibility payment as described in § 23.06(a). An individual who is receiving coverage limited to family planning services as described in § 38 26 USC § 5000A(f); 26 CFR § 1.36B-2(c). 39 26 USC § 5000A(f)(1)(A); 26 CFR § 1.36B-2(c)(2)(i) Nonfinancial eligibility requirements Part 3 – Page 21 (Sec.23.00, Sub.23.01) 9.03(g). An individual who is receiving coverage limited to the treatment of emergency services as described in § 17.02(d); (iii) The CHIP program under Title XXI of the Act; (iv) Medical coverage under chapter 55 of Title 10, United States Code, including coverage under the TRICARE program; (v) A health care program under chapter 17 or 18 of Title 38, United States Code, as determined by the Secretary of Veterans Affairs, in coordination with the Secretary of HHS and the Secretary of the Treasury; or (vi) A health plan under § 2504(e) of Title 22, United States Code (relating to Peace Corps volunteers). (2) Obligation to complete administrative requirements to obtain coverage.40 An individual who meets the eligibility criteria for government-sponsored MEC must complete the requirements necessary to receive benefits. An individual who fails by the last day of the third full calendar month following the event that establishes eligibility under (b)(1) of this subsection to complete the requirements to obtain government- sponsored MEC (other than a veteran’s health-care program) is treated as eligible for government- sponsored MEC as of the first day of the fourth calendar month following the event that establishes eligibility. (3) Special rule for coverage for veterans and other individuals under chapter 17 or 18 of Title 38, USC §.41 An individual is eligible for MEC under a health-care program under chapter 17 or 18 of Title 38, USC section only if the individual is enrolled in a health-care program under chapter 17 or 18 of Title 38, USC section identified as MEC in regulations issued under § 5000A of the Code. (4) Retroactive effect of eligibility determination.42 If an individual receiving APTC is determined to be eligible for government-sponsored MEC that is effective retroactively (such as Medicaid), the individual is treated as eligible for MEC under that program no earlier than the first day of the first calendar month beginning after the approval. (5) Determination of Medicaid or CHIP ineligibility.43 An individual is treated as not eligible for Medicaid or a similar program for a period of coverage under a QHP if, when the individual enrolls in the QHP, the 40 26 CFR § 1.36B-2(c)(2)(ii). 41 26 CFR § 1.36B-2(c)(2)(iii). 42 26 CFR § 1.36B-2(c)(2)(iv). 43 26 CFR § 1.36B-2(c)(2)(v). The phrase in this section: “or considers (within the meaning of 45 CFR § 155.302(b))” was omitted from this paragraph, as AHS does not conduct “assessment[s] of eligibility for Medicaid and CHIP” within the meaning of 45 CFR § 155.302(b), but rather, determines eligibility for such programs. Nonfinancial eligibility requirements Part 3 – Page 22 (Sec.23.00, Sub.23.01) individual is determined to be not eligible for Medicaid or a similar program. (6) Examples.44 The following examples illustrate the provisions of this paragraph (b): (i) Example 1. Delay in coverage effectiveness. On April 10, 2015, Tax filer D applies for coverage under a government-sponsored health-care program. D's application is approved on July 12, 2015, but her coverage is not effective until September 1, 2015. Under paragraph (b)(1), D is eligible for government-sponsored MEC on September 1, 2015. (ii) Example 2. Time of eligibility. Tax filer E turns 65 on June 3, 2015, and becomes eligible for Medicare. Under § 5000A(f)(1)(A)(i), Medicare is MEC. However, E must enroll in Medicare to receive benefits. E enrolls in Medicare in September, which is the last month of E's initial enrollment period. Thus, E may receive Medicare benefits on December 1, 2015. Because E completed the requirements necessary to receive Medicare benefits by the last day of the third full calendar month after the event that establishes E's eligibility (E turning 65), under paragraph (b)(1) and (b)(2) of this subsection, E is eligible for government-sponsored MEC on December 1, 2015, the first day of the first full month that E may receive benefits under the program. (iii) Example 3. Time of eligibility, individual fails to complete necessary requirements. The facts are the same as in Example 2, except that E fails to enroll in the Medicare coverage during E's initial enrollment period. E is treated as eligible for government-sponsored MEC under paragraph (b)(2) of this subsection as of October 1, 2015, the first day of the fourth month following the event that establishes E's eligibility (E turning 65). (iv) Example 4. Retroactive effect of eligibility. In November 2014, Tax filer F enrolls in a QHP for 2015 and receives APTCs. F loses her part-time employment and on April 10, 2015, applies for coverage under the Medicaid program. F's application is approved on May 15, 2015, and her Medicaid coverage is effective as of April 1, 2015. Under paragraph (b)(4), F is eligible for government- sponsored MEC on June 1, 2015, the first day of the first calendar month after approval. (v) Example 5. Determination of Medicaid ineligibility. In November 2014, Tax filer G applies to enroll in health coverage for 2015. AHS determines that G is not eligible for Medicaid and estimates that G's household income will be 140 percent of the FPL for G's family size for purposes of determining APTCs. G enrolls in a QHP and begins receiving APTCs. G experiences a reduction in household income during the year and his household income for 2015 is 130 percent of the FPL (within the Medicaid income threshold). However, under paragraph (b)(5), G is treated as not eligible for Medicaid for 2015. (vi) Example 6. Mid-year Medicaid eligibility redetermination. The facts are the same as in Example 5, except that G returns to the Exchange in July 2015 and AHS determines that G is eligible for Medicaid. AHS approves G for coverage and AHS discontinues G's APTCs effective August 1. Under paragraphs (b)(4) and (b)(5), G is treated as not eligible for Medicaid for the months when G is covered by a QHP. G is eligible for government-sponsored MEC for the months after G is 44 These examples are extracted from 26 CFR § 1.36B-2(c)(2)(vi). Nonfinancial eligibility requirements Part 3 – Page 23 (Sec.23.00, Sub.23.01) approved for Medicaid and can receive benefits, August through December 2015. Employer-sponsored MEC (1) Definition: related individual. For purposes of this subsection and §§ 23.02 through 23.04, a related individual is an individual who is not an employee of an employer offering an eligible employer-sponsored plan, but who can enroll in such plan because of their relationship to the employee. This definition has a similar meaning as the definition of “dependent” for purposes of the Small Employer Health-Benefits Program under Part Six of this rule. (2) In general.45 An employee and related individual who may enroll in an eligible employer-sponsored plan are eligible for MEC under the plan for purposes of considering eligibility for the federal premium tax credit for any month only if the plan is affordable (§ 23.02) and provides minimum value (§ 23.03). Government-sponsored programs described in paragraph (b) of this subsection are not eligible employer- sponsored plans. (3) Plan year.46 For purposes of this paragraph, a plan year is an eligible employer-sponsored plan's regular 12-month coverage period (or the remainder of a 12-month coverage period for a new employee or an individual who enrolls during a special enrollment period). (4) Eligibility for months during a plan year (i) Failure to enroll in plan.47 An employee or related individual may be eligible for MEC under an eligible employer-sponsored plan for a month during a plan year if the employee or related individual could have enrolled in the plan for that month during an open or special enrollment period for the plan year. If an enrollment period relates to coverage for not only the upcoming plan year (or the current plan year in the case of an enrollment period other than an open enrollment period), but also coverage in one or more succeeding plan years, this paragraph applies only to eligibility for the coverage in the upcoming plan year (or the current plan year in the case of an enrollment period other than an open enrollment period). (ii) Waiting periods.48 An employee or related individual is not eligible for MEC under an eligible employer-sponsored plan during a required waiting period before the coverage becomes effective. (iii) Example.49 The following example illustrates the provisions of this paragraph (c)(4): Tax filer B is an employee of Employer X. X offers its employees a health insurance plan that 45 26 CFR § 1.36B-2(c)(3)(i). 46 26 CFR § 1.36B-2(c)(3)(ii). 47 26 CFR § 1.36B-2(c)(3)(iii)(A). 48 26 CFR § 1.36B-2(c)(3)(iii)(B). 49 26 CFR § 1.36B-2(c)(3)(iii)(C). Nonfinancial eligibility requirements Part 3 – Page 24 (Sec.23.00, Sub.23.01) has a plan year (within the meaning of paragraph (c)(3)) from October 1 through September 30. Employees may enroll during an open season from August 1 to September 15. B does not enroll in X's plan for the plan year October 1, 2014, to September 30, 2015. In November 2014, B enrolls in a QHP for calendar year 2015. B could have enrolled in X's plan during the August 1 to September 15 enrollment period. Therefore, unless X's plan is not affordable for B or does not provide minimum value, B is eligible for MEC under X's plan for the months that B is enrolled in the QHP during X's plan year (January through September 2015). (5) Post-employment coverage.50 A former employee (including a retiree), or an individual related (within the meaning of this paragraph (c)) to a former employee, who may enroll in eligible employer-sponsored coverage or in continuation coverage required under federal law or a state law that provides comparable continuation coverage is eligible for MEC under this coverage only for months that the former employee or related individual is enrolled in the coverage. Other coverage that qualifies as MEC. The following types of coverage are designated as MEC for purposes of considering eligibility for the federal premium tax credit51: (1) Self-funded student health coverage. Coverage offered to students by an institution of higher education (as defined in the Higher Education Act of 1965), where the institution assumes the risk for payment of claims, are designated as MEC for plan or policy years beginning on or before December 31, 2014. For coverage beginning after December 31, 2014, sponsors of self-funded student health coverage may apply to be recognized as MEC. (2) Refugee Medical Assistance supported by the Administration for Children and Families. Coverage under Refugee Medical Assistance, authorized under § 412(e)(7)(A) of the INA, provides up to eight months of coverage to certain noncitizens who are considered refugees. (3) Medicare advantage plans. Coverage under the Medicare program pursuant to part C of Title XVIII of the Act, which provides Medicare parts A and B benefits through a private insurer. (4) State high risk pool coverage. State high risk pools are designated as MEC for plan or policy years beginning on or before December 31, 2014. For coverage beginning after December 31, 2014, sponsors of high risk pool coverage may apply to be recognized as MEC. Eligibility based on enrollment.52 An individual is eligible for MEC under the following programs for purposes of considering eligibility for the federal premium tax credit only if the individual is enrolled in the coverage: (1) Medicare part A coverage requiring payment of premiums. Coverage offered under Medicare for which 50 26 CFR § 1.36B-2(c)(3)(iv). 51 26 USC § 5000A(f)(1)(E). 52 See, IRS Notice 2013-41. Nonfinancial eligibility requirements Part 3 – Page 25 (Sec.23.00, Sub.23.02) the individual must pay a premium for Medicare part A coverage under § 1818 of the Act. (2) State high risk pools. Health coverage offered by a state under a qualified high risk pool as defined in § 2744(c)(2) of the PHS Act, to the extent the program is covered by a designation by HHS as MEC. (3) Student health plans. Self-funded health coverage offered by a college or university to its students, to the extent the plan is covered by a designation by HHS as MEC. (4) TRICARE programs. Coverage under the following TRICARE programs: (i) The Continued Health Care Benefit Program (10 USC § 1078); (ii) Retired Reserve (10 USC § 1076e); (iii) Young Adult (10 USC § 1110b); and (iv) Reserve Select (10 USC § 1076d). (5) MCA coverage for a pregnant woman enrolled in a QHP. Coverage offered under Medicaid for a pregnant woman pursuant to the criteria described in § 7.03(a)(2) if the woman was enrolled in a QHP when she became pregnant.53