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PACE Act Repeals Small Group Definition

Last week, Congress passed and the President signed the “PACE Act” which amended the Affordable Care Act (ACA) definition of small group market. The ACA originally defined the small group market as employers with 1 to 100 employees. The PACE Act amended that definition to “at least one but not more than 50 employees.”

What It Means

The PACE Act leaves it up to the states to decide how they want to define the small group market. States that previously defined the small group market as less than 50 employees will have to pass legislation change the definition. With the passage of the PACE Act, companies with between 51 and 100 employees in states that define the small group market as less than 50 employees will continue to be part of the large group market unless the state changes the definition. This means these companies’ health insurance premiums will continue to be underwritten, and they will not be subject to the “community-rated” products of the small group market.

What It Doesn’t Mean

This does not change the definition of “applicable large employer” under the ACA’s “pay or play” and information reporting provisions. Under the ACA, employers with 50 or more full-time equivalent employees (FTEs) are required to either offer coverage to all full-time employees or pay a penalty. In addition, employers with 50 or more FTEs are required to file annual reports with the IRS detailing offers of coverage to eligible employees.

Gov. Dayton Opts Not to Extend Health Insurance Plans

Govenor Mark Dayton said Monday, November 18, 2013 that he has rejected President Obama’s offer to allow Minnesotans the option to keep their existing health plans another year. Dayton’s decision came on the heels of a five-page letter from the state’s largest insurance companies expressing serious concerns about the president’s plan.

Last week, President Obama gave states the discretion to decide whether to allow some individuals to be grandfathered in on their current policies for a year even if the plans did not comply with the Affordable Care Act. The president made the offer in response to criticism about the rollout of the federal health law and the broad impact of impending rate increases.

The Minnesota Council of Health Plans (MCHP), the industry group that represents all of Minnesota’s largest insurance companies, authored the letter to Commerce Commissioner Mike Rothman. “The President’s announcement comes too late to allow health plans and our regulator to complete filing, rate approvals…to prevent major market disruptions for Minnesotans in the individual marketplace,” wrote executive director Julie Brunner of MCHP.

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