Earlier this month President Barack Obama signed into law the Protecting Affordable Care for Employees (PACE) Act into law, changing the definition of a small employer that was set to occur on January 1, 2016.
In its original form the Affordable Care Act would have automatically expanded the definition of a small employer from under 50 employees to under 100 employees, whereas they were previously classified as large employers. The PACE Act does away with that change, keeping the definition of a small employer at 50 or below as the federal standard (while allowing states to make an affirmative change to raise the number to 100).
Why does this matter?
Because there are additional regulations for the small group market in health insurance that don’t exist for the large group market, plans tend to be more expensive in the small group market. Raising the employee threshold from 50 to 100 would mean that many organizations in the 51-100 employee range would be forced to go from the large group markets to the smaller group markets and would probably see their rates go up. The PACE Act will allow many of these employers to remain in the large group market, though the states will have the option to define the small group market for themselves and could decide to include employers in the 51-100 employee range.
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