Estimated reading time: 3 minutes
On October 7, President Obama signed the Protecting Affordable Coverage for Employees (PACE) Act, which will bring premium relief to mid-size employers with 50 -99 employees on their 2016 group health plan renewal rates.
In defining large and small group health insurance markets, most states define a “small employer” as one who has 50 or fewer employees. The Affordable Care Act called for the definition to be expanded to include those who employed an average of between one and 100 employees on business days during the preceding calendar year and that employ at least two employees on the first day of the plan year.
The PACE Act, which was the result of an uncommon rally by both parties, repeals the expansion of the small group market and retains the rights of the states to determine the threshold for small versus large group market for purchase of insurance.
What this means for mid-size employers
This expansion of the small group market sees a significant effect on mid-size business who had previously been required to purchase benefit policies within the large group market. For 2016 and moving forward, mid-size employers can access small group market plans that must comply with the ACA requirements that do not apply in the large group market, like the premium rating restrictions and essential health benefits (EHB) requirement.
Depending on the demographics of the mid-size ALE, the change to age-banded rating can result in significant premium increases for some employees and subsequently the employer.
Some insured group health plans for small employers may not include some of the ACA’s requirements for small group market plans. If an issuer is using the transition relief, it is required to send a notice to the employer that explains which ACA reforms are not included in the health plan’s coverage. This means that many employers have already been able to delay moving from the large group to the small group market. The PACE Act makes this relief permanent for all employers.
The transition policy is not available in every state, however. Because the insurance market is primarily regulated at the state level, issuers must be allowed to use the transition policy. Also, even if the transition policy is available in a state, health insurance issuers are not required to follow the transition relief and renew plans that do not comply with ACA reforms.
To find out more about how the new PACE Act impacts your Wisconsin organization, contact Infinity Benefits Solutions and we’ll be happy to help!