Small Group Market Expansion

Posted November 05, 2015

For purposes of defining their large and small group health insurance markets, most states currently define a “small employer” as an employer that has 50 or fewer employees. The Affordable Care Act (ACA) expanded the definition of a “small employer” to include those that employed an average of between one and 100 employees on business days during the preceding calendar year and that employ at least two employees on the first day of the plan year. However, for plan years beginning before January 1, 2016, a state could elect to define “small employer” as an employer that employed an average of between one and 50 employees on business days during the preceding calendar year.

The ACA change means that some employers who have traditionally purchased policies in the large group market will be shifted into the small group market for 2016 and beyond. Plans in the small group market must comply with a number of ACA requirements that do not apply in the large group market, such as the ACA’s premium rating restrictions and the essential health benefits (EHB) requirement.

This Legislative Brief describes the impact of the ACA’s small group market expansion and outlines the ACA provisions that will apply when an employer moves into the small group market.

HCR Small Group Market Expansion

This Legislative Brief is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.