How Does the PACE Act Affect Pennsylvania?

President Obama made the 14th change to the Affordable Care Act this week, having already made 13 changes as of July 2015, according to an analysis done by the Congressional Research Service. On October 7, 2015, the Protecting Affordable Coverage for Employees (PACE) Act was signed. The PACE Act amends the definition in the Affordable Care Act of “small employer” in regards to purchasing healthcare. The change in the Affordable Care Act (ACA) will have an effect on employers in the mid-size market that have 51-99 employees and are currently in the “large employer” market.

What Was the Definition of “Small Employer” Previously?

Before the amendment to the Affordable Care Act, the ACA required states to redefine “small employer” to those who employed up to 100 employees instead of just those who were employing fewer than 50 employees. This change would have been implemented beginning January 1, 2016. Until January of next year, states would be able to keep the definition of “small employer” to those who had up to 50 employees, which most states were doing.

The concern with the ACA’s January 2016 change was with the cost of insurance for employers who were previously in the “large employer” market with fewer than 100 employees. A “small employer” was not required to provide insurance to their employees if they had fewer than 50. However, if they did choose to provide insurance, they had to meet strict requirements and cover essential health benefits, a requirement that does not currently apply to those in the “large employer” market. Employers who would now be considered part of that “small employer” group were concerned that there would be large price increases in the insurance market.

What Does this Mean for Pennsylvania?

The PACE Act removed some of the worry to those who are in the mid-size market of 51-99 employers. However, while the PACE Act was signed and has been put into effect, the caveat is that each state is still allowed to choose if and when they will change their definition of “small employer.” The PACE Act only lifted the requirement that states were mandated to expand their definition of “small employer” to employers with fewer than 100 employees in 2016.

As of right now, Pennsylvania still has not determined if they will change their definition of “small employer.” So while there is some relief because it is no longer a requirement in the ACA to expand the definition of “small employer,” questions still surround what each state will do with this new amendment.

If you have any questions, please contact Brown Schultz Sheridan & Fritz today!