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States Will Now Define Small Group Employers Under the ACA

States Will Now Define Small Group Employers Under the ACA

President Obama has signed into law new legislation that impacts which companies will be considered small group employers.

The Protecting Affordable Coverage for Employees, a.k.a. the PACE Act, repeals the mandated across-the-board small-group expansion from groups of up to 50 employees to groups of up to 100 employees that was to go into effect on January 1, 2016.

The PACE Act gives the states the flexibility to determine the size of their small-group market. This change is expected to save premiums for employees of small businesses, which were expected to rise when the small group classification was expanded to 100 employees.

What does this mean for your business?

Individual states will now begin deciding whether they’ll define small group employers as up to 50 or up to 100 employees. Some states took action early and have already passed legislation that mirrors the ACA and expands the definition of small group to groups of up to 100 effective January 1, 2016. Those states will expand to 100 unless the states take action to pass legislation to define small group as up to 50. It is expected that the state of Georgia will keep the small group definition at under 50. Confirmation of that decision is expected soon.

The majority of states that took no action regarding the definition of small group within their borders will await confirmation from the departments of insurance and from legislatures as to whether the states will accept the new federal standard or if they will take action of their own to expand the definition of small group as up to 100 employees.


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