It was October 2014 when a voluntary benefits broker, a traditional self-funding TPA and an IRS PPACA regulator walked into a bar….

You might think it was chance, but a certain snarky editor of a popular benefits publication was already in the bar (yeah, I know, what a surprise). He was there to meet the voluntary broker, who had brought along the TPA, his new best friend. The bar owner, who has 33 locations in five states, is a client of the benefits broker. He has more than 600 employees and although the company has never offered qualifying medical coverage to its hourly employees, it has offered a limited medical plan in the past. With PPACA mandates and deadlines breathing down his neck, the bar owner was trying to understand his options.

The bar owner is worried about penalties. He knows he can't afford the cost of affordable qualified care for his employees and he's looking to his benefits broker to deliver a solution. The benefits broker has been scouring the marketplace for the last six months and has come up with minimum essential coverage as a solution. The broker brought in his new best friend, a TPA, to explain self-funding and how an MEC plan operates. The bar owner understands the basics of the MEC plan and is willing to assume a new level of risk to avoid the penalty. But, the broker explains, the MEC plan only satisfies one of the two penalties of section 4890(H). Because he wouldn't be offering affordable qualifying coverage, the