The Affordable Care Act (ACA) allows companies to shop for health insurance plans based on their group size – you are either a small group or a large group, but which one?
The ACA defines small groups as any company with 1-50 employees– this may change depending on where you are located! In 2016 the ACA’s definition for small health group was set to expand from companies with 1-50 employees to companies with 1-100 employees. However, the recently passed PACE Act will prevent this definition from automatically happening; instead, individual states are allowed to decide whether to adopt the expanded small health group definition or not.
What does this mean?
The definition of a small group will vary state by state. California is one of the many states that will expand the definition of a small group health insurance to 1-100 employees.
- 1-100 employees = small group, offering health insurance is not mandatory.
- 50-100 employees = now a small group, must offer health insurance (unless your state does not adopt the definition).
- 100+ employees = large group, must offer health insurance.
Why is this important?
This change may impact your insurance rates which in turn affects your premiums (and ultimately, your bottom dollar). If you are a business with 50-100 employees then your label as a large group will change to a small group and affect the rates and plans available to your business.
How does a small group label change my rates?
Rates are applied to defined size groups, which affect the premiums you pay. Insurance carriers often “pool” several small groups together based on certain characteristics and over a set period of time, measures the losses for these pooled groups. This lets carriers decide which benefits need changing and what rates to increase to keep the pool profitable.
The small group pooling and stricter requirements may cause an increase in premiums for some groups and reduced premiums for others.
So, if I was a large group in 2015 and will be defined as a small group in 2016, do I still have to provide insurance for my employees?
It depends. Businesses with more than 50 employees, regardless of their small or large group label, must offer health insurance to their employees. If you have less than 50 employees, then it is not mandatory that you offer health insurance. Businesses with 50-100 employees, that will become small groups, may see changes in their rates, premiums and plan availability.
Curious to see if rates will change for your business? Give us a call at 800-685-7176.