The President signed the Protecting Affordable Care for Employees (PACE) Act into law on October 7, 2015, which was introduced as a bipartisan bill in the spring of this year. The PACE Act seeks to amend the definition of a “small group” employer, from “up to 50 employees” to “up to 100 employees”, in order to provide state insurance regulators with the flexibility to define the small group market in his or her jurisdiction.
The concern with the ACA’s original definition of a “small group” employer was with the cost of insurance for employers who were previously in the “large employer” market with fewer than 100 employees. A “small employer” was not required to provide insurance to their employees if they had fewer than 50. However, if they did choose to provide insurance, they had to meet strict requirements and cover essential health benefits, a requirement that does not currently apply to those in the “large employer” market. Employers who would now be considered part of that “small employer” group were concerned that there would be large price increases in the insurance market. Self-funded (insured) group health plans are not impacted by this law.
What many employers are not aware of:
Each state is still allowed to choose if and when they will change their definition of “small employer.”, therefore choosing to keep the federal standard (50 employees) as the definition of “small group” or legislate the small group market up to 100 employees. The PACE Act only lifted the requirement that states were mandated to expand their definition of “small employer” to employers with fewer than 100 employees in 2016.
As for our fellow Pennsylvania employers, Pennsylvania Insurance Department Press Secretary, Ronald Ruman, announced on October 9th that as a result of the PACE Act, the size of a “small group” for purposes of health insurance in Pennsylvania will remain at 50 or fewer. The Pennsylvania Department of Insurance is not required to expand its definition of “small group” to 100 employees.
We highly recommend that Employers work with their insurance brokers and carriers to understand the impact of the repeal of this ACA provision for small groups in each state where they offer group health insurance.