Have you heard that the Affordable Care Act’s unofficial slogan is “Change is the only constant”? Heraclitus had it right. Case in point: the ACA is changing its definition of Small Group.
Wait, what’s happening?
On January 1st, 2016, the Affordable Care Act will change the way it previously defined “Small Group Employer.” If you have 51-100 employees on January 1st, you’ll be reclassified from a “Large Group Employer” (defined as 51+ employees, currently) to a “Small Group Employer” (defined as 1-100 employees, next year). Employers with 101+ employees will continue to be classified as “Large Group Employer.”
According to a briefing this month from the American Academy of Actuaries, this change could affect over 150,000 companies and more than 3 million workers.
How will becoming a Small Group Employer impact my company?
If your company has 51-100 employees, your premiums will likely go up (since health insurance carriers underwrite Small Group Employer plans differently).
Additionally in 2016, the ACA’s Employer Shared Responsibility provisions (which are already in effect for companies with 101+ employees) will begin applying to companies in the 51-100 range. Specifically, this means:
- Small Group Plans need to meet certain ACA requirements, like including Essential Health Benefits (pediatric dental and vision, preventive care and diagnostic coverage), which also impact rates.
- Small Group Employers will face penalties if they don’t offer affordable coverage that meets minimum value, and they have employees who obtain subsidized coverage in an exchange.
What can I do about it?
We expect carriers to allow companies in the 51-100 range to early-renew—keeping their current rates and plans for at least one more year—but their decision on this is still pending. Long term, there are self-insurance options we can leverage to keep your costs down while keeping you ACA-compliant. Bear in mind, there’s always a possibility that the timeline for the 51-100 reclassification will be extended. If that happens, or anything else changes, we’ll cover it here.
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