Change in Law Sets ‘Small Business’ Cap at 50

A worrisome piece for shortliners in the Affordable Care Act has been corrected. President Obama signed into law recently a measure that makes the ACA expansion of the small group health insurance market optional for states. The market had been slated to expand to businesses with between 51 and 100 employees, Politico reported. Both the House and the Senate passed the fix earlier this month.

Before the law, which is Protecting Affordable Coverage for Employers, or the PACE Act, this piece of the Affordable Care Act would have taken effect Jan. 1 and expanded the definition of small business to those with 100 employees. The result would have been premium increases as high as 40% for some businesses.

Rep. Tony Cardenas (D-CA), told the Memphis Business Journal that the law could “mark a shift” in the legislative debate over the Affordable Care Act. While this change is good, complications remain.

An article in Employee Benefit News explains that several states, including Colorado, Connecticut, Washington, Oregon, Virginia, Vermont, Maryland, Nevada and the District of Columbia, have passed laws redefining “small group” beginning in 2016 to match the original, 100-employee threshold under ACA.

Those states will need to pass new laws to bring their threshold for the small-group definition back down to 50. However, many states’ legislatures are out of session and will not return in time to prevent the new law from taking effect.

That means, according to the Benefit News, 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 to decide the threshold given to them under the PACE Act.

Insurance commissioners in some states might be able to temporarily suspend the raising of the size threshold if legislative action to make the change permanent appears imminent.

Several employer groups, including the Society for Human Resource Management and the U.S. Chamber of Commerce, applauded the introduction of the PACE legislation earlier this year, saying “it is in the best interest of employers and their employees that states determine the definition of their small group market.”  S