Definition of Small Employer
Currently under the ACA, small employers are defined as having 50 or fewer employees for market reform purposes. For small employer medical plans that are non-grandfathered, these market reforms include billed rates by participant age, metal-tier plan designs and inclusion of essential health benefits.
As of January 1, 2016, the ACA requires all states and DC to define a small employer as having 100 or fewer employees for market reform purposes.This will impact our clients with 51-100 employees who sponsor non-grandfathered medical plans, and force them to renew with small employer market reforms.
However, the federal agencies have received feedback from many organizations that believe the small employer definition should remain at 50 or fewer employees, at least for a transitional period of time. Therefore, the HHS issued optional “transitional relief” under which each state and DC could allow employers with 51-100 employees that renew January 1, 2016 through October 1, 2016 to remain a large employer for market reform purposes.
- Virginia and, just recently, DC have adopted this transition relief. Therefore, Virginia and DC employers that sponsor a non-grandfathered medical plan, have 51-100 employees, and renew January 1, 2016 to October 1, 2016, will remain a large employer until the plan’s 2017 renewal date.
- As of today, Maryland has not adopted this transition relief.
Separately, organizations have also asked the HHS to postpone the required change to the small employer definition for two years (until 2018). The HHS has not responded yet, but it is possible that this may be adopted and the state-based transition relief referenced above will not be necessary.
Use of DC Health Link for DC Employers
Regardless of the any pending changes in the small employer definition, the District is considering not mandating use of the DC Health Link for DC employers with 51-100 employees to purchase group medical coverage, at least through 2017. Keller participated in the working committee that made this recommendation to the DC Health Link Board and we expect a final resolution at the May Board meeting.
At this time, DC employers with 50 or fewer employees with non-grandfathered medical plans will be required to use the DC Health Link for group medical coverage upon the 2016 medical plan renewal date and subsequent years. While opposition to mandatory enrollment in the DC Health Link remains strong, the District has indicated that it is not willing to postpone mandatory enrollment for this size employer.
Please note – the employer size for compliance with the ACA’s Employer Shared Responsibility mandate and reporting is not affected by the definition of a small or large employer for ACA market reform purposes.