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Does Medicare Count as Minimum Essential Coverage (MEC)

Updated for Tax Year 2015


OVERVIEW

If you have Medicare, you probably have minimum essential coverage (MEC) as defined by the Affordable Care Act (also known as Obamacare). Learn more about which Medicare coverage does and doesn't count.


The Affordable Care Act (also known as Obamacare) requires taxpayers to have health insurance that provides a certain level of benefits -- referred to as minimum essential coverage, or MEC. Those who don't have MEC may have to pay a tax penalty. If you are covered by Medicare, then you probably have minimum essential coverage.

does medicare count as minimum essential coverage

Who's eligible for Medicare

Medicare is a government-run health insurance program for people age 65 and older, as well as disabled individuals. To qualify for Medicare at age 65, you or your spouse must have:

  • Worked and paid Medicare taxes for 10 years
  • Medicare taxes were withheld from your wages, just like Social Security 

To qualify with a disability, you must have been eligible for Social Security disability benefits for 2 years or have a condition that qualifies you for immediate benefits -- Lou Gehrig's disease or permanent kidney failure, for example.

Medicare's four parts

Medicare benefits come in four "parts":

  • Part A is hospital insurance. It covers inpatient care in a hospital or skilled nursing facility, as well as hospice care and some in-home care. 
  • Part B is medical insurance. It covers doctor visits, outpatient procedures, medical supplies and preventive care. 
  • Part C is "Medicare Advantage." These are health plans offered by private insurance companies that have a contract with Medicare to provide services. When you enroll in a Medicare Advantage plan, the insurer takes care of your Part A and Part B benefits. 
  • Part D is optional prescription drug coverage

What you have to do

You have minimum essential coverage if you have:

  • Part A coverage OR
  • Both Part A and Part B coverage OR
  • A Medicare Advantage Part C plan

This is the case for the vast majority of people on Medicare. You don't need to do anything special to avoid the penalty. 

You don’t have minimum essential coverage if you have:

  • Part B by itself

If you have only Part B and don't have other coverage that provides hospitalization insurance, you must either pay the penalty or obtain an exemption. TurboTax Health's Exemption Check can help you figure out whether you qualify for an exemption.

Paying the penalty, if necessary

If you don't have minimum essential coverage and don't qualify for an exemption, you'll pay the penalty when you file your income taxes. The official name for the penalty is the "individual shared responsibility payment."

How much you have to pay depends on several factors: 

  • the number of people in your household who were uninsured
  • the number of months out of the year they were uninsured
  • and your household income

Find out how to calculate the payment at TurboTax Health.

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The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.


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