Bill Redefining Small Group Health Plans Signed by Obama

Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...

By Sara Hansard

Oct. 8 — Businesses with 51 to 100 employees will be able to continue buying large group health insurance plans under a law signed by President Barack Obama.

The Protecting Affordable Coverage for Employees Act (H.R. 1624), signed into law Oct. 7, amends the Affordable Care Act, under which employers with 51 to 100 employees would have been classified as small employers in 2016. Small group plans are subject to requirements such as covering essential health benefits, and the PACE Act makes it optional for states to treat companies with 51 to 100 employees as small employers.

The Congressional Budget Office said in an analysis Sept. 15 that the bill would likely result in lower premiums for companies of that size. The bill passed the House on Sept. 28 and the Senate on Oct. 1 under procedures used for legislation on which there is little dissent.

State regulators, business groups and health insurers called for making the change in the ACA. At a Sept. 9 hearing of the House Energy and Commerce Health Subcommittee, Monica Lindeen, Montana commissioner of securities and insurance and president of the National Association of Insurance Commissioners, said that unless H.R. 1624 was enacted quickly as employers are planning their 2016 insurance coverage, many employers with 51 to 100 employees who have young, healthy employees may self-insure. That would leave a sicker pool of enrollees in the small group market for companies with up to 50 employees and drive up health costs and premiums.

H.R. 1624 was introduced in the House in March by Rep. Brett Guthrie (R-Ky.) and in the Senate in April by Sen. Tim Scott (R-S.C.).

“With the PACE Act quickly signed into law, we have taken a great step forward in protecting small and mid-sized businesses from the harmful effects of Obamacare,” Scott said in a statement. “I am pleased we were able to stop the growth of Obamacare and block implementation of this harmful rule.”

The National Association of Health Underwriters (NAHU), which represents health insurance brokers, issued a statement applauding Obama for signing the law.

“As we await the decisions of the states, NAHU will continue to work with the carriers, state legislators and state insurance commissioners on implementation,” association Chief Executive Officer Janet Trautwein said in the release.

State legislators and departments of insurance that haven't previously acted to define small group as anything other than the federal standard will now be faced with the decision to accept this new definition, or to take action to change the definition of small group within their borders, NAHU said in its release.

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

To contact the editor responsible for this story: Janey Cohen at

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