October 08, 2015

Following passage in the Senate, the President signed the Protecting Affordable Care for Employees (PACE) Act into law on October 7, 2015. The PACE Act rescinds the ACA’s expansion of small group health insurance policies from “up to 50 employees” to “up to 100 employees” that was scheduled to take effect January 1, 2016.

This means that employers in the 51-100 employee size group may not be subject to small-group market rules, including requirements to provide essential health benefits defined by the ACA with less underwriting criteria. Currently the underwriting criteria covering small group plans includes age, geography and smokers in the group and excludes claims experience and gender. The legislative intent of the PACE Act is to support small and mid-size businesses by limiting potential premium increases and give states the option to define their small group market size up to 100 employees. At this time this has no affect on Yuba City Health Insurance products.

What this means for employers:

  • States may choose to keep the federal standard (50 employees) as the definition of “small group” or legislate the small group market up to 100 employees.
  • Insured group health plans for employers with 51-100 employees in states that have already passed laws defining “small group” for 2016 according to the ACA threshold of 100 employees may still be considered “small group” because the state law overrides the federal law.
  • Employers with 51-100 employees in states that have not enacted any legislation defining group size will benefit from the PACE Act.
  • Self-funded (insured) group health plans are not impacted by this law.
  • Employers should work with Yuba City Insurance experts David Ernstam Financial & Insurance Services, Inc. to understand the impact of the repeal of this ACA provision for small groups in each state where they offer group health insurance.

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