October 2, 2015
Small Group Definition Will Not Change Nationally in 2016 –
States Have Flexibility
On October 1, Congress approved a bill repealing the Affordable Care Act (ACA) provision expanding the small group employer definition, which was scheduled to change from 1-50 to 1-100 employees on January 1, 2016. President Obama is expected to sign the bill into law next week.
The repeal legislation, the Protecting Affordable Coverage for Employers (PACE) Act, maintains the current 1-50 employee definition of a small employer and gives states flexibility to expand the small employer definition up to 100 employees if they determine market conditions necessitate the change.
The District of Columbia and several states – CA, CO, MD, NY, VA and VT – have enacted laws or issued regulatory guidance changing their small group definition to the 1-100 employee definition in 2016.* With the repeal of this ACA provision, these states may revise their laws/regulatory actions to, once again, conform to the federal definition of small employer. Until then, these laws/regulatory actions remain in effect.
Expansion of the small group definition subjects non-grandfathered insured plans of employers with 51-100 employees to the ACA community-rating standards and requires them to cover all Essential Health Benefits. These requirements result in higher costs and less carrier choice. Non-grandfathered insured plans of employers with 51-100 employees in states that keep their small group definition at 1-50 employees are not subject to these requirements.
It’s important to note that U.S-issued expatriate plans were already exempt from the ACA’s small group definition change. Plans of any group that employs more than 50 global lives will continue to be considered large group plans.
