Small firms dodge an ACA bullet with signing of new law

President Obama just signed into law the Protecting Affordable Coverage for Employees (PACE) Act, a bill that received rare bipartisan support. For many small and mid-sized employers, the law comes as welcome news.  

Because of PACE, employers won’t have to worry about an upcoming health reform provision that was slated to alter the definition of “small group employer” in 2016.

Definition won’t change

Under the ACA, the definition of small employer was slated to increase to any business with one to 100 employees on January 1, 2016.

For the purposes of the exchange and the insurance market ACA regs, a small employer is currently defined as one with one to 50 employees. Under PACE, that definition remains intact. However, under the new law, states do have the option of using the 100-employee threshold if they wish.

PACE will also limit participation in Obamacare’s SHOP exchanges to employers with no more than 50 employees (unless states expand the threshold).

The 100-employee threshold would have forced “mid-sized” firms (51-100 employees) into the small group market where plans are subject to a number of additional ACA requirements. This, critics argued, would drive up healthcare costs.