Minimum Essential Coverage

Minimum essential coverage generally includes broad-based medical coverage, not including specialized coverage such as workers compensation, accident or disability income insurance, and separate dental and vision coverage.

Minimum Value Coverage

According to the Department of Health and Human Services, employers must cover minimum value, or at least 60 percent of the cost of medical expenses, and provide affordable coverage, or less than 9.5 percent of employee’s modified adjusted gross household income.

To assess whether the coverage is considered affordable, employers can use one of three techniques, but each applicable situation must also meet certain other requirements.

  • Evaluate the employee’s W-2 wages shown in Box 1, which is also known as the Form W-2 Safe Harbor.
  • Multiply an hourly rate by 130 to calculate monthly wages. If the employee is salaried, the employer can calculate the monthly pay. This is known as the Use the Rate of Pay Safe Harbor.
  • For a single individual, reference the federal poverty line, or use the Federal Poverty Line Safe Harbor.

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