The Dual-Offer Strategy — Using MEC and MVP Plans to Avoid Both ACA Penalties

Many employers believe they must purchase expensive traditional major medical coverage to comply with the Affordable Care Act.

Fortunately, that's not always the case.

One of the most effective ACA compliance strategies combines Minimum Essential Coverage (MEC) with a Minimum Value Plan (MVP).

Together, these plans help employers address both Penalty A and Penalty B while giving employees meaningful coverage options.

Step One: Offer MEC to Avoid Penalty A

Minimum Essential Coverage satisfies the ACA requirement to offer coverage to at least 95% of full-time employees.

MEC plans typically provide:

• Preventive care
• Annual wellness services
• ACA-required preventive benefits

Offering MEC helps employers avoid the ACA's "Sledgehammer" penalty.

Step Two: Offer an Affordable MVP

To avoid Penalty B, employers also offer a Minimum Value Plan (MVP).

An MVP:

• Meets the ACA's Minimum Value standard.
• Can be structured to satisfy affordability requirements.
• Provides employees with comprehensive medical coverage.

Employees choose the option that best fits their healthcare needs and budget.

What If Few Employees Enroll?

Many Applicable Large Employers worry about what happens when only a handful of employees elect coverage—or no one enrolls at all.

Without sufficient enrollment, many health plans cannot remain active, making it impossible for the employer to continue offering ACA-compliant coverage.

That's where ghost lives become an important administrative solution.

Ghost lives are administrative placeholder enrollments used solely to satisfy minimum enrollment requirements and keep the health plan active.

They:

• Do not receive health insurance.
• Do not receive medical benefits.
• Exist only for plan administration.

Because the MEC and MVP are bundled together as one compliance strategy, employers only need to satisfy the required combination of enrolled employees and ghost lives to keep both plans active.

This allows employers with very low participation to continue making compliant offers of coverage while avoiding unnecessary ACA penalties.

Why Employers Like the Dual-Offer Strategy

The MEC + MVP strategy provides several advantages:

• Helps avoid both Penalty A and Penalty B.
• Gives employees meaningful healthcare choices.
• Works well for employers with low participation.
• Can significantly reduce healthcare costs.
• Supports ACA compliance without requiring expensive traditional health plans.

How Memberly Helps

Memberly works with Applicable Large Employers by:

• Monitoring ALE status.
• Designing compliant MEC and MVP plan strategies.
• Performing affordability calculations.
• Evaluating Minimum Value compliance.
• Structuring ghost-life solutions when appropriate.
• Completing Forms 1094-C and 1095-C.
• Assisting with IRS ACA penalty notices.

Our objective is simple:

Help employers satisfy the ACA while controlling healthcare costs through smart plan design—not simply avoiding penalties, but creating a long-term employee benefits strategy.

The Bottom Line

ACA compliance doesn't have to be confusing or expensive.

With proper planning, employers can determine when they become an ALE, understand how Penalty A and Penalty B work, and implement a cost-effective MEC + MVP strategy that satisfies federal requirements while supporting employees and protecting the business from costly IRS assessments.