UPDATE: On Wednesday, October 7, 2015, President Obama officially signed the “Protecting Affordable Coverage for Employees Act” into law.
The Affordable Care Act (ACA) is constantly evolving. As your trusted benefits advisor, we’re here to keep you up to date and cut down on confusion. With that in mind, we’re providing this most recent ACA update to you:
Yesterday, the Senate approved bipartisan legislation that made a small, technical change to the ACA concerning which companies are considered a “small group” employer for the purposes of purchasing group insurance policies.
The Protecting Affordable Coverage for Employees (PACE) Act is headed to President Obama’s desk, and there are reports that he’ll sign it into law.
If signed, how will it impact the ACA?
Under the Affordable Care Act, the definition of a “small group” employer—currently 2-50 employees—was set to expand to 2-100 employees in 2016. The PACE Act would undo the change, keep the definition of “small group” at 50 or fewer employees, and leave it to individual states to decide if they want to expand the definition.
Why does this matter?
Well, it matters because it impacts how rates are set in the broader insurance market.
Small group health plans are bound by certain requirements to which large group plans are not, and determining which companies fall into which category affects how insurance companies pool risk. The American Academy of Actuaries predicted that allowing the original change in classification to happen would lead to an increase in premiums for small businesses.
By this logic, the bill just passed would likely prevent a premium increase over and above any normal increase.
How might this impact my business?
This will unfold in the marketplace over the next few months as states decide what to do, and as insurance companies set new rates.
While there’s a lot still up in the air, right now there’s no action needed on your end. Like most everything associated with the ACA, these regulations are very complicated and can have any number of cascading effects.
We are closely monitoring regulatory developments, and we’ll be sure to let you know if it starts to affect your policy.