Congress Reconsiders “Small Group” Expansion for 2016 | Employee Health Insurance Fort Worth

On September 28, 2015, Congress took a step to give each state flexibility to define employer size for “small group” health insurance policies. As part of the federal health care reform law, the definition of small group is scheduled to increase from 2 – 50 employees to 1 – 100 employees starting in 2016. Legislation passed by the House, and now being considered in the Senate, would repeal the federal change and make small group expansion optional for each state.

Background

State insurance laws define employer size for “small group” and “large group” health insurance policies sold in that state. The Affordable Care Act (ACA) imposes a number of requirements on all group health plans, but imposes additional requirements specifically on nongrandfathered small group policies. Examples include the requirement to include coverage for all 10 categories of essential health benefits (EHBs) and the requirement to use certain adjusted community rating methods for premiums. For this reason, small group policies tend to be more costly than policies than can be sold to larger groups. On the other hand, employers meeting the definition of a small group cannot be rejected; carriers in the small group market must accept all qualifying employers that apply.

Historically, each state has defined small group as fewer than 50 employees. For 2016, however, the ACA expands the definition to include groups with up to 100 employees. Employers with 51 – 100 employees are concerned that moving to the small group market will result in significant premium increases.

Although small group expansion is included in the federal ACA law, insurance policies are regulated primarily by the insurance law of the state in which the policy is issued. Several states are amending their state insurance laws for the expanded definition, while other states intend to allow existing groups with 51 – 99 employees to continue renewing their large group policies without adopting changes.

Congressional Action

On September 28, 2015, the U.S. House of Representatives passed H.R. 1624, Protecting Affordable Care for Employees Act (PACE), to repeal the federal small group expansion and continue offering flexibility to each state. The Senate may take up action on a similar bill that had been introduced many months ago. Such action, if passed by both chambers and enacted by the President, would eliminate confusion about the states’ authority to define employer size for small group policies in their states.

State-Specific Information

State insurance laws continue to control the options, provisions and requirements applicable to policies issued in their state. This also is the case with the small group rules. For information about your state’s current rules and provisions for new or renewing policies in 2016, refer to a carrier or broker that is licensed to sell products in your state.

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