The Individual Mandate and Minimum Creditable Coverage

As you are probably aware, the Massachusetts Health Care Reform law requires all adults 18 and over to have health insurance. This is known as the “Individual Mandate” and is enforced through the income tax filing process.

Individual Mandate

• For tax filing season 2008, individuals only had to show they had health insurance on December 31, 2007 to avoid the tax penalty of $219.
• For tax filing season 2009, penalties are much higher (up to $912) and accrue for each month individuals don’t have health insurance, with some exceptions.
• For tax filing season 2010, individuals will need to show that as of January 1, 2009, their health insurance coverage offered at least basic standard benefits. This is called “Minimum Creditable Coverage” or MCC.

Minimum Creditable Coverage

• MCC is the minimum amount of health coverage that individuals need to have to avoid penalty for calendar year 2009 (tax year 2010). Starting January 1, 2009, the minimum amount of coverage must include benefits like prescription drugs, preventive and primary care, hospital services, etc. On January 1, 2010, more benefits like diagnostic imaging and screening, maternity and newborn care and radiation and chemotherapy will also be added to the list.
• The impact of this should be minimal. According to the State, most residents who have health coverage have plans that meet MCC standards. Also, a majority of employers that provide health insurance benefits offer coverage that meets MCC standards. The Health Care Reform law does not technically require employers to offer plans that are MCC compliant, but the hope is that employers will be pressured to do so if their employees are being penalized on their taxes.
• If individuals are unsure about whether or not their plans meet MCC standards, they can check with their employers or their insurance carriers. Health insurance carriers licensed in Massachusetts are required by the State to notify consumers about whether their plans meet these standards.
• Health insurance like MassHealth, Commonwealth Care, Commonwealth Choice, Medicare, all meet MCC standards. Health Safety Net (formerly called Free Care) is not health insurance and does not meet MCC standards.

“Red flags” that mean a policy does NOT meet MCC standards

• A policy shouldn’t charge “deductibles” of more than $2,000 for an individual, or $4,000 for a family, each year. Any separate deductibles for prescription drugs may not exceed $250 for an individual or $500 for a family each year.
• A policy shouldn’t require more than $5,000 a year in total out-of-pocket costs for an individual , or $10,000 for a family, for services provided by the health plan’s network. This “out-of-pocket maximum” should include any deductibles, “co-insurance”, and co-payments of over $100. The out-of-pocket maximum does not have to include prescription drug costs and co-payments of less than $100.
• A policy shouldn’t have any maximum dollar amount of benefits for a particular illness, or any maximum benefit amount per year.

To learn more about MCC, see http://www.compartners.org/pdf/news/10-22-08_mcc_flyer.pdf.

-Adapted from “ Minimum Creditable Coverage- update” e-mail, Pragya Rizal, Assistant manager, Public Payer Policy and Operations, November 10, 2008 and “ You may have health insurance – but is it good enough?”, Community Partners, retrieved at above link on 11/16/08.

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