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Obama Signs ACA Small Group Market Rule Repeal: The PACE Act

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Obama Signs ACA Small Group Market Rule Repeal- The PACE ActOn October 7th, 2015 President Obama signed the Protecting Affordable Coverage for Employees (PACE) Act. The PACE Act repeals the upcoming Affordable Care Act (ACA) requirement that the small group market be expanded to include businesses with 51-100 employees. Marking a rare occurrence of bipartisan change to ACA that both President Obama and congress agree upon.

Small Group Expansion

Prior to ACA, most states defined “small employer” in their small group health insurance market as employers with 50 or fewer employees. Effective for plan years beginning in 2016, the ACA was scheduled to expand the small group market to include those groups between 51 and 100 employees. The PACE Act eliminates this definition just months before it was set to become effective.

Employer Impact

The small group market expansion was anticipated to have a significant effect on the employer’s with 51-100 employees. The expansion was expected to increase premium costs while decreasing plan options for these employers. This was partly due to the small group market being more heavily regulated than the large group market.

Prior to the PACE Act, California, Colorado, Maryland, New York, Virginia, Vermont and the District of Columbia had already passed laws to redefine their small group market to be consistent with the ACA’s 100 employee threshold. Even with the PACE Act enactment to the 50 employee threshold, it will be up to these states to take action to undo these changes, if they so wish. States will now have the flexibility to determine the threshold of their small group market.

This is a guest post from Matt Lovendusky of Brown & Brown of New York. Along with designing and implementing plans for employers, he works with clients to provide solutions to the challenges of Health Care Reform and compliance.

Connect with Matt MattL@bbinsnyc.com, http://bbinsnyc.com/

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