Small Group Definition Will Not Change Nationally in 2016 - States Have Flexibility
Note: On October 7, 2015, President Obama signed the legislative bill into law that repeals the national expansion of the small group definition. The definition of small group size will be a state decision. Please see our FAQ and Timeline for the latest state-specific details.
October 2, 2015
On October 1, Congress approved a bill repealing the Affordable Care Act (ACA) provision expanding the small group employer definition, which was scheduled to change from 1-50 to 1-100 employees on January 1, 2016. President Obama is expected to sign the bill into law next week.
The repeal legislation, the Protecting Affordable Coverage for Employers (PACE) Act, maintains the current 1-50 employee definition of a small employer and gives states flexibility to expand the small employer definition up to 100 employees if they determine market conditions necessitate the change.
The District of Columbia and several states – CA, CO, MD, NY, VA and VT – have enacted laws or issued regulatory guidance changing their small group definition to the 1-100 employee definition in 2016.* With the repeal of this ACA provision, these states may revise their laws/regulatory actions to, once again, conform to the federal definition of small employer. Until then, these laws/regulatory actions remain in effect.
Expansion of the small group definition subjects non-grandfathered insured plans of employers with 51-100 employees to the ACA community-rating standards and requires them to cover all Essential Health Benefits. These requirements result in higher costs and less carrier choice. Non-grandfathered insured plans of employers with 51-100 employees in states that keep their small group definition at 1-50 employees are not subject to these requirements.
It’s important to note that U.S- issued expatriate plans were already exempt from the ACA’s small group definition change. Plans of any group that employs more than 50 global lives will continue to be considered large group plans.
Cigna will continue to help our businesses with 100 and fewer employees find affordable, compliant health benefit solutions that meet their unique needs. Cigna client managers will be reaching out to employers that would have been impacted by the change in 2016.
* Limited transitional relief is available in DC and VA.
We encourage you to bookmark Cigna's health care reform website, InformedOnReform.com, where we will update information as future guidance is released.
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