How and when is a policys MEC status determined?
MEC status is generally determined by applying the 7-pay test during each of the first seven contract years. If the policy funding during those seven years satisfies the 7-pay test, the policy will not be a MEC. However, if at any time during or after the initial seven-year testing period, there is ever a “material change” in the benefits under (or in other terms of) the contract, then a new 7-pay test is applied during the seven contract years following the material change. See Q&A 7 for what constitutes a material change. If there is a decrease in benefits, there is retroactive retesting at the lower death benefit.
