PACE Act Impacts Small Group Definition

Posted on: October 12, 2015 2:00 pm
Tags: May/june newsletter

- information taken from Anthem, CIGNA, Cornerstone and United Healthcare announcements

On October 1, 2015, the Protecting Affordable Coverage for Employees (PACE) Act was passed by the House and Senate. President Obama signed the bill into law on October 8, 2015.

The PACE Act repeals the mandated small-group expansion for groups of 50 to 100 employees that was to go into effect on January 1, 2016. The Act amends the Affordable Care Act (ACA) to include employers with 51 to 100 employees as large employers for purposes of health insurance markets.

The District of Columbia and several states had already 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 a small employer. However, states may still decide to go forward with the expansion of the small group definition instead of being forced into the national standard.

Under the ACA, health insurance offered in the small group market must meet certain requirements that do not apply to the large group market. This includes adjusted community rating, no medical underwriting and the requirement to cover all ten categories of essential health benefits. These requirements result in higher cost 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.

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