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PACE Act Capping Small Employer Definition at 50

The Affordable Care Act changed the definition of “small group” for the purpose of health insurance from an employer with 1 to 50 employees to one with 1 to 100 employees. This change would subject mid-sized employers (those with 51-100 employees) to new rating restrictions and benefit requirements.

On October 7, 2015 President Obama signed House Resolution 1624, also known as the Protecting Affordable Coverage For Employees Act (PACE Act). The PACE Act revised the definition of small employer for purposes of the Patient Protection and Affordable Care Act (PPACA), changing the number of employees that equate to a small employer back to 1 to 50 employees, rather than 1 to 100 employees. The PACE Act retains the smaller group size indefinitely, but does give states the option to extend the definition of small employer to 1 to 100.

The following states have issued guidance on the Definition of Small Employer:

Delaware: In light of the PACE Act, signed into law on October 8, 2015 by President Obama, Delaware issued Bulletin No.79 on October 15, 2015. This Bulletin clarifies that the definition of "small employer" in Chapter 72 of the Delaware Insurance remains applicable to small employers, as defined in 18 Del.C. §7202(34), with a group health plan providing coverage to not more than 50 eligible employees.

The Bulletin also withdraws Delaware Bulletin No. 75, issued on April 15, 2015, regarding transitional renewal of large group health insurance policies for groups with 51-100. Please click here for further details.

Idaho: On September 28, 2015 Idaho has signed into law their support of the Protecting Affordable Coverage for Employees (PACE). Idaho has retained its previous small employer definition as per Idaho Code of up to 50 employees. Please click here for further details.

Maryland: On October 8, 2015 Maryland issued Bulletin 15-27 to clarify the effect of House Resolution 1624, PACE on the definition of small employer in Maryland law, with regard to health benefit plans sold on and off the SHOP Exchange and stand-alone dental contracts sold on the SHOP Exchange. Maryland definition of small employer will NOT be expanding to 100 lives on or after January 1, 2016. Please click here for further details.

Oregon: The Oregon Insurance Department (OID) has decided to adopt rules to change the definition set forth in HB 2466 to return to the 1-50 employee definition. The OID will adopt a temporary rule to that effect not later than October 16, 2015. The temporary rule will take effect upon adoption and remain in force until replaced by a permanent rule. Because the definition of small employer will remain as 1-50 after January 1, 2016, there will be no need for expanded transitional health benefit plans as authorized by HB 2466 and the OID will include a repeal of rules related to those expanded transitional plans in the October 16, 2015 temporary rule. The OID will also provide guidance as needed to insurers who began the process of implementing transitional plans. Please click here for further details.

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