ACA update: The PACE Act and what it means for small employers

By Julie Barnes, Director of Health Policy
October 07, 2015

Congress has passed new federal legislation called the PACE Act (Protecting Affordable Coverage for Employees Act) that overrides the Affordable Care Act’s mandatory expansion of small employer group size. President Obama signed the bill on October 7, 2015.

Under the ACA, starting in 2016 the definition of a small employer group was set to change from 1 – 50 employees to 1 – 100 employees. The PACE Act undoes this change, keeping the definition of a small employer at 50 or fewer employees, leaving it to individual states to decide if they want to expand it.

Why does this matter?

Small employers are subject to different regulations than large employers. Changing the size definition impacts the cost of health insurance. The American Academy of Actuaries predicted that changing the definition would lead to an increase in premiums for some groups.

What does this mean for Regence states?

Washington:  With the change in federal law, the Office of the Insurance Commissioner is rolling back the implementation of the change in small group definition. The definition of “small group” will remain as 1-50 employees on January 1, 2016, rather than become 1-100 employees.

Oregon:  Earlier this year the legislature authorized the Oregon Insurance Division (OID) to delay small employer expansion to the extent allowed by federal law. Now that Congress has acted, OID is taking steps to solicit rapid stakeholder input, a necessary precursor to the emergency rulemaking that would be required to execute a delay. The key question, from OID’s perspective, is whether it is now “too late” to change course. OID has scheduled stakeholder meetings and a decision is expected soon. 

Idaho:  Idaho will keep the definition at 1-50 employees.

Utah:  It is likely that Utah will keep the 1-50 definition.

What’s next?

Regence is monitoring regulatory developments. We are reaching out to our affected employer groups to help them understand these changes, and help them find affordable, compliant health plan solutions best tailored to their needs.