Potential Implications of the Small Group Definition Expanding to Employers with 51-100 Employees

I the health insurance market, small employers are those employing up to 50 employees. For plan years beginning in 2016, the Affordable Care Act (ACA) expands the definition of small employers to include those with up to 100 employees. As groups with 51-100 employees renew or newly purchase coverage, they must abide by the rules and regulations governing the small group market, including those related to benefit coverage, actuarial value, and premium rating restrictions. The small group rules apply to fully insured plans, whether they are purchased through or outside of the Small Business Health Options Program (SHOP) marketplace. Plans covering groups with 100 or fewer employees will be pooled together for premium rating purposes.1 Employers that self-insure are not subject to these requirements. In addition to the expansion of the small employer definition, the ACA’s shared-responsibility provisions-which already apply to groups of 100 and above-will begin applying to groups of 50-99 employees in 2016. Under these provisions, employers will face financial penalties if they have employees who obtain subsidized coverage in an exchange and either don’t offer coverage or offer coverage that doesn’t meet minimum value and affordability requirements.2 As a result, be-