MEC vs Limited Medical vs MVP What Employer Groups Need To Know

Flexible Health Benefit Solutions for Large Employers

For large employer groups, benefits administration is no longer just an HR function, it’s a compliance requirement, a cost center, and a competitive advantage.

At SBMA, we deliver health benefit strategies that meet regulatory thresholds, control costs, and provide employees with real, usable care. Our plans are designed to comply with ACA mandates, reduce exposure to IRS penalties, and support the people who keep your business running.

Minimum Essential Coverage (MEC)

• What it is: The lowest level of coverage that satisfies the ACA’s Individual Mandate (no longer federally enforced, but still active in some states).
• What it covers: Only preventive and wellness services as defined by the ACA. MEC is not comprehensive, it does not include hospitalization or emergency care.
• Purpose for employers: Satisfies ACA Penalty A (the “offer” requirement). Offering MEC to 95%+ of full-time employees protects the employer from the $2,000+ per-employee penalty if coverage isn’t offered at all.

Limited Medical / Voluntary / Worksite Plans

• What they are: Supplemental plans that provide fixed-dollar benefits for routine care, doctor visits, labs, or hospitalization. Often affordable and easy to access, but not ACA-compliant on their own.
  
• Dental and vision also fall into this supplemental category.
  
• Voluntary = employee-paid; Worksite = typically employer-offered (may include accident, critical illness, hospital indemnity, etc.)
  
• Key point: These are not MEC or MVP. They are add-ons, not standalone solutions.

Minimum Value Plan (MVP)

• What it is: A plan that covers at least 60% of the total allowed cost of benefits and includes substantial coverage for inpatient hospitalization and physician services.
  
• Purpose for employers: Satisfies ACA Penalty B (affordability + value). Employers must offer an MVP plan that’s also affordable (≤9.12% of employee’s income in 2023) to avoid this penalty.
  
• Important: MVP must meet both the coverage and affordability test.

Can MEC + Limited Medical = MVP?

No. MEC plus limited medical (voluntary or worksite) does not satisfy the ACA’s MVP standard.

• MEC alone satisfies Penalty A (coverage was offered).
  
• MVP is needed to avoid Penalty B (coverage was affordable and valuable).
  
• Limited medical, dental, and vision improve employee access, satisfaction and useability, but they do not change a plan’s MVP status.

When is MEC + Limited Medical Useful?

This combination is strategic when:

• You need to avoid Penalty A cost-effectively.
  
• Your workforce is lower-income, part-time, or less likely to enroll in major medical.
  
• You want to offer real, usable benefits without the cost of major medical.
  
• You accept some exposure to Penalty B, but mitigate it with affordability strategies.

What Employers Are Required to Do

Employers with 50 or more full-time equivalent employees (ALEs) must:

• Offer MEC to at least 95% of their full-time employees and their dependents to avoid Penalty A.
  
• Offer at least one plan that meets MVP and is affordable (≤9.12% of the employee’s income in 2023) to avoid Penalty B.

ACA Employer Mandate Penalties

Penalty A: The “No Offer” Penalty

• Applies when no MEC is offered to 95%+ of full-time employees.
  
• Penalties:
  2025 Penalty: $2,900 – 2026 (estimate) $2,985 (assuming ~3% inflation) per full-time employee (excluding the first 30 employees), if just one employee gets subsidized coverage on the Exchange.

Penalty B: The “Unaffordable or Low-Value Offer” Penalty

• Applies when MEC is offered, but either:
  
  • The coverage doesn’t meet MVP, or
  • It’s not affordable
    
• Penalties:
  2025 Penalty $4,350 – 2026 (estimate) $4,480 (assuming ~3% inflation) per year per full-time employee who gets subsidized Exchange coverage.

Best Practices for Employers

If you’re offering MEC and limited coverage but not MVP, consider these steps:

• Communicate clearly to employees what the plan covers (and doesn’t)
• Track hours and eligibility to ensure ACA compliance and mitigate audit risk
• Consult legal counsel or benefits advisors to calculate potential exposure
• Monitor Exchange notices, if employees apply for subsidies, it could trigger Penalty B
• Offer opt-in MVP plans to targeted employees if budget allows, while using MEC plans for the broader workforce

What Types of Plans Meet MVP Standards?

To meet Minimum Value (MV) under the ACA, a plan must:

1. Cover at least 60% of the total allowed cost of benefits (actuarial value), and
   
2. Include substantial coverage for both:
   
   • Inpatient hospitalization, and
   • Physician services

Level-Funded Plans (with MVP structure)

Can meet MVP standards

• A hybrid between fully insured and self-funded plans
• Includes stop-loss insurance, fixed monthly payments
• If structured correctly with essential health benefits, these plans can be MVP compliant
  

Plan Type	Meets MEC Requirement (Penalty A)	Meets MVP Requirement (Penalty B)	Covers Hospitalization & Substantial Physician Services	Usable Benefits for Employees	Typical Use Case
Minimum Value Plan (MVP)	Yes	Yes	Yes	Yes	Employers aiming to avoid all ACA penalties
MEC Plan (Preventive-Only)	Yes	No	No	Limited	Avoids Penalty A only; low-cost compliance option
Limited Medical Plan	No	No	No	Yes	Supplemental plan to improve access and satisfaction
MEC + Limited Medical	Yes	No	No	Yes	Strategic cost-control approach; some risk of Penalty B
Dental / Vision / Worksite	No	No	No	Yes	Enhances overall package but not ACA-relevant alone

How to Know If a Plan Meets MVP

Employers should work with their broker, carrier, or third-party administrator (TPA) to obtain an actuarial certification or Summary of Benefits and Coverage (SBC) that explicitly states the plan:

• Meets the Minimum Value Standard
  
• Is affordable based on one of the ACA’s safe harbor methods (W-2, rate of pay, or federal poverty level)
  

Some carriers may also label these plans as MVP-compliant in proposal materials.

What SBMA Offers: Built for Compliance, Designed for People

We provide a full spectrum of benefit plan designs, from basic MEC to robust MVP coverage, plus the infrastructure to administer them at scale. Our approach ensures compliance, cost control, and usability.

MEC Plans

Our ACA-compliant MEC plans satisfy the requirement to offer minimum essential coverage and help employers avoid Penalty A. These plans include preventive services, annual exams, immunizations, and screenings.

Limited Medical Coverage

Fixed-indemnity, limited medical plans offer set-dollar reimbursements for common services like office visits, labs, and urgent care. While they do not meet MVP standards alone, they provide real value to employees and improve access to care.

Voluntary Benefits & Worksite Products

Offerings like accident, critical illness, hospital indemnity, and short-term disability enhance your benefits package while allowing employees to opt into additional protection at low cost.

Dental & Vision

Add-on coverage that improves employee satisfaction and rounds out a comprehensive package. Voluntary or employer-paid options available.

MVP Plans

We offer Minimum Value Plans that meet all ACA requirements, including inpatient hospitalization and substantial physician services. These plans can be combined with MEC offerings to provide tiered coverage options across your workforce.

Telehealth Services

On-demand care that employees understand and use. Our telehealth solutions reduce absenteeism and improve access to primary care at no additional cost to the system.

Full-Service Administration

At SBMA, we don’t just provide the plans, we manage the entire process from start to finish:

• Eligibility tracking
• ID card generation and distribution
• Enrollment and offboarding
• Claims support
• 1094/1095 ACA reporting
• PCORI fee processing
  

Everything is centralized through our digital platform and supported by our U.S.-based service teams.

Strategic Flexibility for Large Employer Groups

Every workforce is different. Our solutions are designed to adapt to your needs:

• Hourly, seasonal, or part-time workforces
• Multi-location employers
• High-turnover industries
• Compliance-driven strategies

You don’t need to choose between affordability and compliance, or between usability and cost control. At SBMA, you get all four.

Avoid ACA Penalties and Deliver Real Value

By offering a combination of MEC, limited medical, voluntary, and MVP plans, SBMA helps you:

• Avoid Penalty A by offering MEC to eligible employees
• Avoid Penalty B with an affordable MVP plan
• Lower overall healthcare costs
• Provide benefits that employees recognize, value, and use

The Gold Standard in Benefits Administration

At SBMA we provide an infrastructure and administration technology alongside our hands-on US-based support team that is trusted by large employer groups nationwide.  We ensure that you can provide health benefits with compliance, clarity, and consistency and no administration headaches.

SBMA. Streamlined. Scalable. Superior.

The Gold Standard in Benefits Administration.