House Approves Bill Defining Small Group Plans

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By Sara Hansard

Sept. 28 — The House Sept. 28 passed legislation that would keep the current definition of small group health plans at 50 or fewer employees, thus preventing a part of the Affordable Care Act from taking effect.

H.R. 1624, the Protecting Coverage for Employees Act, passed the House under suspension of the rules, a procedure used to pass legislation expeditiously without amendment. The bill was called for by business groups, state regulators and the health insurance industry.

H.R. 1624 would amend a provision of the ACA set to take effect in 2016 that would include all companies with up to 100 employees in the definition of small group plans. Under the ACA, small group plans are subject to more stringent regulations, including the requirement to cover essential health benefits. Under the bill, firms with 50 or fewer employees would generally be defined as small employers unless their state elects otherwise.

A similar version of the House legislation, S. 1099, has been introduced in the Senate, and advocates say quick passage is needed as companies plan their coverage for 2016.

CBO Predicts Net Premium Reduction

The Congressional Budget Office (CBO) issued an analysis Sept. 15, saying H.R. 1624 would result in a net reduction in premiums for health insurance purchased by some firms with between 51 and 100 employees in the near term. Premiums would be lower because some firms would choose to offer insurance that does not meet the standards required under current law, the CBO said.

CBO and the Joint Committee on Taxation expect that most states would not elect to expand the definition to include up to 100 employees, adding that most firms with between 51 and 100 employees would no longer be subject to certain requirements established by the ACA or be able to offer coverage through a Small Business Health Options Program (SHOP) exchange.

Only firms defined as small may offer insurance coverage to their employees through the SHOP unless their state elects otherwise, the CBO said. The CBO said it expects that the SHOP exchanges will develop additional features, including allowing for employees to choose plans, that will enhance competition in the small group insurance market and lead to reduced premiums. “Therefore, under H.R. 1624, premiums could also be higher for some firms that are no longer able to purchase insurance through a SHOP exchange,” it said.

For the most part, however, the CBO believes premiums would be lower in most years.

The American Academy of Actuaries has estimated that expanding the definition of small employer to include companies with as many as 100 employees could affect more than 150,000 establishments with more than 3 million workers, and would likely lead to decreased plan design flexibility, adverse selection and higher premiums, according to a Republican analysis of the bill.

America's Health Insurance Plans released a statement saying the bill represents “progress” by preserving access to affordable coverage for 3.4 million workers and their families.

In a separate statement, Council for Affordable Health Coverage President Joel White said the bill “would avoid an unnecessary 18 percent increase in health insurance premiums—and provide much-needed relief to small businesses.” The council is an association of organizations representing consumers, physicians, small businesses, insurers and large employers, among others.

To contact the reporter on this story: Sara Hansard in Washington at

To contact the editor responsible for this story: Brian Broderick at