Although President Obama signed the Protecting Affordable Coverage for Employees (PACE) Act this week, many employers the legislation is intended to protect remain in limbo. The PACE Act nullifies the Affordable Care Act’s originally scheduled 2016 expansion of the threshold of “small group” for health insurance purposes from employers with 50 or fewer employees and full-time equivalents, to those with 100 or less.
The PACE Act’s enactment means that employers in that 51-100 size bracket that buy health coverage will not be subject to the small-group market rules. Under the ACA, small-group plans are subject to the requirement to provide the 10 essential health benefits and have fewer underwriting criteria to use, making coverage significantly less costly for some groups (particularly those with healthy workforces), and more so for others.
Although the PACE Act’s enactment now maintains the level at 50, some states (namely Colorado, Connecticut, Washington, Oregon, Virginia, Vermont, Maryland, Nevada and the District of Columbia) will need to pass new laws to bring their threshold for the small-group definition back down to 50. However, many states’ legislatures are only in session several months a year, and for many new sessions won’t begin until next year.
That means that insured employers in those states with 51-100 employees technically may fall into that small-group classification until their state legislatures take advantage of the authority given to them under the PACE Act to adopt the lower threshold.
If you’re in North Carolina, the reversal of the original ACA law has already occurred, and small groups are definite at 50 and below Full Time Equivalents.
There is no guarantee that all states will choose to keep the small-group ceiling at 50 employees, even though that is all that ACA will now require. For example, Washington State’s insurance commissioner, in testimony given at Congressional hearings on the PACE Act, said he would prefer using the 100-employee to expand the small-group risk pool.
However, state legislatures, not insurance commissioners, have the last say on the matter.