What is minimum essential coverage under the Affordable Care Act?

By: Susan Sherwood
Counselor Diego Osorio helps Addie Whitaker shop for health insurance as the second round of open enrollment for the Affordable Care Act opens in late 2014.
Counselor Diego Osorio helps Addie Whitaker shop for health insurance as the second round of open enrollment for the Affordable Care Act opens in late 2014.
The Washington Post via Getty Images

In 2010, health care costs in the United States totaled $2.6 trillion; even so, many Americans were not covered by insurance [source: Kaiser]. The Affordable Care Act, fully implemented in 2014, was designed to expand health care coverage to more people. For instance, you can no longer be denied covered if you had a pre-existing condition; young adults under 26 can remain on their parents' health plans and people are expected to have minimum essential coverage. The act required that federal and state governments, insurers, employers and consumers share responsibility for providing health insurance.

Minimum essential coverage refers to the basic health care protection American citizens and permanent residents are expected to have, or else pay a penalty tax. People of all ages are included in this mandate. Coverage comes in many forms, such as policies from employers, the military, Medicare, Medicaid and the Children's Health Insurance Program (CHIP). Other options include individual plans which consumers personally obtain from insurance companies, the health insurance marketplace or institutions of higher education.


The "minimum essential coverage" requirement is based on the source of insurance rather than the benefits offered because not all accepted sources have the exact same standards. However, to be acceptable typically, the insurance will [source: Obamacare Facts]:

  • Cover at least 60 percent of out-of-pocket costs
  • Guarantee coverage – you can't be denied coverage because of health status or any other reason except ability to pay
  • Have a renewable policy
  • Offer at least 10 essential benefits -- among them, outpatient care, emergency room visits, prescription drugs, lab tests, maternity care and mental health care

You can see the entire list of benefits at Healthcare.gov.

If people don't have coverage, they must either pay a penalty on their federal income tax returns or qualify for exemptions. The penalty for 2014 is 1 percent of household income above the filing threshold or $95 per adult in the family, plus $47.50 per child up to a maximum payment of $285 [source: IRS]. The exemptions to minimum essential coverage are available only for special groups, such as certain religious congregations that oppose medical insurance, members of Native American tribes, prisoners in correction facilities and people with very low incomes.

In 2014, most people who have health insurance in place have minimal essential coverage [source: IRS] However, very limited benefits, such as dental or vision care, workers' compensation, disability insurance and Medicaid for family planning alone, are insufficient to meet the act's requirements. One option for people who lack needed coverage is the health insurance marketplace website. Here, an insurance seeker can learn about financial assistance, evaluate policies, and find one that is affordable. Suitable policies are available outside the marketplace, but the ACA doesn't offer tax credits for these.

You can cross your fingers and hope for good health, or you can follow a regimen of preventive care and medical treatment for specific problems, thanks to insurance. The minimum essential coverage mandated by the Affordable Care Act increases the number of people who don't have to use wishful thinking to stay healthy.


Lots More Information

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  • Healthcare.gov. "Individuals and Families." (Oct. 23, 2014) www.healthcare.gov
  • Kaiser. "Health Care Costs: A Primer." May 1, 2012. (Oct. 23, 2014) http://kff.org/health-costs/issue-brief/health-care-costs-a-primer/
  • Internal Revenue Service. "The Premium Tax Credit." Feb. 25, 2014. (Oct. 23, 2014) http://www.irs.gov/uac/Newsroom/The-Premium-Tax-Credit2
  • Internal Revenue Service. "Questions and Answers on the Individual Shared Responsibility Provision." Oct. 1, 2014. (Oct. 23, 2014) http://www.irs.gov/uac/Questions-and-Answers-on-the-Individual-Shared-Responsibility-Provision
  • U.S. Department of Health and Human Services. "About the Law." (Oct. 23, 2014) http://www.hhs.gov/healthcare/rights/