Skip to Main Content

Obama Signs PACE ACT | Repealing ACA Small Group Market Rule

Thursday, October 8, 2015
Obama Signs PACE ACT | Repealing ACA Small Group Market Rule
Print

Protecting Affordable Coverage for Employees (PACE) Act repeals the Affordable Care Act (ACA) requirement that the small group market in every state be expanded to include businesses with 51-100 employees. 

Quick Facts
  • President Obama has signed into law the Protecting Affordable Coverage for Employees (PACE) Act
  • PACE Act defines small groups as those with up to 50 full-time equivalents
  • The PACE Act repeals the mandated small-group expansion from groups of up to 50 employees to groups of up to 100 employees that was to go in to effect on January 1, 2016

Small Group Market Expansion

Most states have historically defined “small employers” as those with 50 or fewer employees for purposes of defining their small group health insurance market.

Effective for 2016 plan years, the ACA expanded the definition of a “small employer” to include those that employed an average of between one and 100 employees.

The PACE Act eliminates the ACA’s new definition and gives states the option of expanding their small group markets to include businesses with up to 100 employees.

Impact on Employers

The expansion of the small group market was expected to have a significant effect on mid-size businesses. These businesses would have been required to buy coverage for employees in the small group market, which is more heavily regulated than the large group market.

This change was expected to increase premiums costs for employers and employees and reduce flexibility in plan design due to added small group market requirements.

Some states have already amended their state laws to adopt the expanded small group market definition. These states will have to take action to undo those changes.

Most states are already taking advantage of a transition rule provided by the Dept. of Health and Human Services (HHS). HHS has said it will not enforce small group market regulations for mid-size businesses if their policies are renewed by Oct. 1, 2016.

This means that many employers have already been able to delay moving from the large group to the small group market. Pending specific state approval, the PACE Act will make this relief permanent.

We are watching for state approvals in our main states of Illinois, Wisconsin, Indiana and Michigan as these local decisions will affect our clients’ options.

 

Material posted on this website is for informational purposes only and does not constitute a legal opinion or medical advice. Contact your legal representative or medical professional for information specific to your legal or medical needs.

Get Started

Let Your Aspirations Set the Agenda

Grow with who you know. Reach out to us today and start the conversation, so you’re better protected and prepared for what comes next.

Talk to an Advisor

man looking left