Coverage an hourly workforce will actually enroll in, and the ACA will accept.
Restaurants, hotels, staffing firms, retailers and seasonal employers hit the same wall. Once they reach 50 full-time equivalent employees the employer mandate applies, but a major medical plan priced for an office sits unenrolled when the paycheck is hourly. Minimum essential coverage and minimum value plans are the tools built for that gap.
We place both, usually side by side, and model the affordability math against your actual payroll before anything is offered to an employee.
MEC and minimum value are not the same plan, and they do not protect against the same penalty.
Most of the confusion in this market comes from treating them as interchangeable. They are not.
| Plan | What It Covers | What It Protects Against | What It Does Not Do |
|---|---|---|---|
| Minimum Essential Coverage (MEC) | The preventive care the ACA requires, sometimes with extras such as telemedicine or a limited number of office visits. | Offered to at least 95% of full-time employees, it satisfies the offer requirement behind the first employer mandate penalty. | It is not minimum value, so it does nothing about the second penalty. Employees offered only MEC can still buy subsidized Marketplace coverage. |
| Minimum Value Plan (MVP) | Pays at least 60% of covered costs overall and substantially covers inpatient hospital and physician services. | Offered at an affordable price, it closes off the second penalty for full-time employees. | It is not a rich plan. Deductibles and out-of-pocket limits are high by design. |
| Traditional major medical | Comprehensive coverage with a conventional network and deductible. | Both penalties, when offered at an affordable price. | It is the plan hourly employees most often decline because of the payroll deduction. |
The penalty arithmetic is what decides the design.
Three figures drive every MEC and minimum value decision for 2026.
The First Penalty
$3,340 per full-time employee, minus the first 30, for 2026 — $3,780 for 2027 — if coverage is not offered to at least 95% of full-time employees and one of them receives a premium tax credit. A MEC plan offered broadly is the cheapest way to take this one off the table.
The Second Penalty
$5,010 for 2026 and $5,670 for 2027, but only for each full-time employee who actually receives a premium tax credit because the coverage offered was unaffordable or below minimum value. This is the one a minimum value plan is priced to prevent.
The Affordable Price
Coverage is affordable in 2026 if the employee’s cost for self-only coverage stays under 9.96% of income. Under the federal poverty line safe harbor that means no more than $132.46 a month — or $129.89 for plan years starting January through June — which works for every full-time employee regardless of wage. See the affordability percentage for 2026 and 2027.
Four decisions we settle before a single employee is offered anything.
Offer Both, Price One
The usual design is a low-cost MEC plan anyone can take, alongside a minimum value plan priced at or under the safe harbor for full-time employees. The MEC plan keeps participation up; the minimum value plan carries the compliance weight.
Know Who Is Full-Time
For variable-hour and seasonal employees, the look-back measurement method decides who counts as full-time and when. Get that wrong and the right plan goes to the wrong people. The look-back method decides who gets the offer. Get the measurement method right first.
Check the Enrollment Floor
Some programs require a minimum number of enrolled employees before they will issue coverage. We confirm that before quoting, not after the enrollment meeting. Checking enrollment minimums prevents failed launches. Some programs require a minimum number of enrolled employees before issuing coverage.
Decide What Sits Beside It
A fixed indemnity plan can add cash benefits for hospital stays and visits on top of a MEC plan. It is not major medical, and every piece of employee material has to say so plainly. Clear labeling keeps MEC companion plans honest.
When a MEC plan is the wrong answer.
An employee who enrolls in any employer plan, including a MEC plan, gives up any premium tax credit for those months. An employee who is only offered a MEC plan that is not minimum value keeps the choice. For a lower-wage employee with a family, a subsidized Marketplace plan may be the better coverage, and the enrollment material should not steer them away from it.
Below 50 full-time equivalents there is no employer mandate at all, and an individual coverage HRA or a qualified small employer HRA may do more for the same budget — see the ICHRA and QSEHRA guide. Hospitality employers should also read our page on restaurant and hotel benefits.
What hourly employers ask before they offer anything.
Ten answers for the owner, the controller and the person running payroll.
What is a MEC plan?
A minimum essential coverage plan is employer coverage that meets the ACA’s definition of minimum essential coverage, usually built around the required preventive services. It satisfies the offer requirement for the first employer mandate penalty but is not minimum value.
What is a minimum value plan?
A plan that pays at least 60% of the total allowed cost of covered benefits and substantially covers inpatient hospital and physician services. Offered at an affordable price, it prevents the second employer mandate penalty for full-time employees. Minimum value plus affordability avoids the second penalty.
Does a MEC plan avoid all ACA penalties?
No. Offering MEC to at least 95% of full-time employees avoids the first penalty. The second penalty still applies for any full-time employee who receives a premium tax credit because the coverage offered was unaffordable or not minimum value. MEC plans avoid the first penalty, not the second.
What is the most an employee can pay and still be affordable in 2026?
9.96% of income for self-only coverage. Using the federal poverty line safe harbor, that is $132.46 a month for 2026 plan years, or $129.89 if the plan year starts between January and June. Affordability limits shape MEC plan contributions. Check the safe harbor used.
Who should be offered the minimum value plan?
At minimum, every full-time employee as the ACA defines it: 30 or more hours a week, or 130 hours a month, measured for variable-hour staff over a look-back period. Employers often offer it more widely. The full-time definition decides who must get the offer.
Can part-time employees enroll in the MEC plan?
Yes, if the plan document allows it. Offering it more widely raises participation and does not create an employer mandate problem, since the mandate is measured on full-time employees. Wider MEC eligibility can raise participation. The mandate measures full-time employees only.
Will employees lose their Marketplace subsidy?
Only if they enroll in the employer plan, or if they are offered coverage that is both affordable and minimum value. An employee offered only a MEC plan can decline it and keep a premium tax credit. A MEC-only plan without minimum value leaves Marketplace subsidies open to employees who decline it.
Is a MEC plan self-funded or insured?
Both exist. Many are self-funded with a third-party administrator, and some carriers offer insured versions. The structure affects reporting, stop-loss and who files the PCORI fee, so we explain it for the specific plan before you sign. Plan structure affects MEC reporting and fees.
Can we pair a MEC plan with other coverage?
Yes. Fixed indemnity, accident and critical illness plans are common companions. They pay set cash benefits rather than claims, and they are never a substitute for major medical coverage. Companion plans supplement, never replace, major medical. They pay set cash amounts, not a share of the bill.
We have fewer than 50 employees. Do we need any of this?
No employer mandate applies below 50 full-time equivalents, so there is no penalty to avoid. A traditional small-group plan, a MEC plan for participation, or an HRA can each make sense, and we compare them for you. Small employers have several good options to compare.
Want the numbers for your workforce? Send us your census, or talk it through with someone first. No cost, no obligation.
Figures read at the source in September 2026. General information, not legal or tax advice; plan-specific questions belong with ERISA counsel, and we will bring them in.
Send us your renewal.
We’ll tell you whether it looks competitive, where we see opportunity, and the five questions we’d put to your carrier. No cost, and no obligation to move anything.
The renewal letter
Your current plan summary
Contribution split by tier
Enrolled counts by tier
Four documents — two more if your group is 50 or more. Nothing else; every extra one is a reason to postpone.
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