What is Minimum Essential Coverage?

Minimum Essential Coverage Explained

As per ‘Individual Mandate’, if you do not have insurance under the ACA act, you will have to pay a penalty. To avoid this penalty, you will have to take insurance that provides ‘Minimum Essential Coverage’. According to Individual Mandate, you must maintain minimum essential coverage throughout the year or get an exemption, or pay a fee for each month you go without it (although you are allowed less than three months in a row each year without coverage, due to a coverage gap exemption). You must report the minimum essential coverage you have taken on your Federal Income Taxes for each month.

Benefits and Minimum Essential Coverage Types

The ACA has created many new rules and regulations for health insurance which ensures some ground-breaking new benefits, rights, and protections to insurer. Most major medical plans, which are mandated to follow the majority of rules set forth by the ACA, count as minimum essential coverage. You can find the types of coverage considered as minimum essential coverage below.

  • Grandfathered plan
  • Plans purchased before March 23, 2010 are called grandfathered plans and don’t have to follow Obamacare’s rules and regulations. In such plans, you can still be dropped form coverage for reasons other than fraud, be denied treatment for preexisting conditions, face annual and lifetime dollar limits and more.

    However, if your plan loses the ‘grandfathered’ status, you may have to move to a ACA compliant plan.

  • Non-Grandfathered non-minimum essential coverage plan
  • Supplemental health insurance, or Supplementary insurance, is meant to supplement your existing plan and is not ObamaCare compliant on its own. Supplementary insurance is sold by private companies and can help you pay for health care costs that your plan doesn’t cover, like copayments, coinsurance, and deductibles.

    There are a number of supplemental health insurance options for private individual and family health insurance, and for public health options like Medicare. Whether or not a supplement health plan is right for you depends on your medical needs, what plan you have already, and what plans are available to you.

Minimum essential coverage includes the following types of health insurance:

  • Employer-sponsored coverage (including COBRA coverage and retiree coverage).

  • Coverage purchased in the Individual Market, including a qualified health plan offered through the Health Insurance Marketplace (also known as an Affordable Insurance Exchange).

  • Medicare Part A coverage and Medicare Advantage plans.

  • Most Medicaid coverage.

  • Children’s Health Insurance Program (CHIP) coverage.

  • Certain types of veterans health coverage administered by the Veterans Administration.


  • Coverage provided to Peace Corps volunteers.

  • Coverage under the Non-appropriated Fund Health Benefit Program.

  • Refugee Medical Assistance supported by the Administration for Children and Families.

  • Self-funded health coverage offered to students by universities for plan or policy years that began on or before Dec. 31, 2014. In later plan or policy years, sponsors of these programs needed to apply to HHS to be recognized as minimum essential coverage

  • State high-risk pools for plan or policy years that began on or before Dec. 31, 2014. In later plan or policy years, sponsors of these program needed to apply to HHS to be recognized as minimum essential coverage.

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