On October 7, 2015, the President signed the Protecting Affordable Care for Employees (PACE) act into law. This act withdrawals the ACA’s expansion of small group health insurance policies from up to 50 employees to up to 100 employees. Previously the expansion was to take place effective Jan. 1, 2016 and it would have affected an increase in insurance premiums for nearly 3 million people.
The purpose of PACE is to support the small to mid-sizes business by limiting premium increases. It also gives states the option to define their small group marketing size up to 100 employees. But just what is a small employer? Most states have defined small employer as any employer with less than 50 employees. There are three methods as to identifying under 50 employees which include average total number of employees (ATNE); full-time equivalents (FTEs) and eligible employees.
With the new law passed, employers in the 51-100 group are not subject to small-group market rules. These rules include requirements to provide essential health benefits (as defined by the ACA) and the underwriting criteria which includes age, geography and smoking status in small groups. Employers with 51-100 employees in states that have defined group size will benefit from the PACE Act.
Almost all of the states will retain the 50 employee limit. Group health plans for employers with 51-100 employees in states that have already passed laws defining “small group” for 2016 in accordance to the ACA threshold of 100 employees may still be considered “small group” because the state law overrides the federal law. States can elect to keep the federal standard of 50 employees as the definition of “small group” or legislate the small group market up to 100 employees.
Self-funded insured group health plans are not impacted by this law.
To understand how you, as an employer, will be impacted call your Kuzneski Financial Group advisor today! 724.349.1919.