As hoped, the Protecting Affordable Coverage for Employees Act (PACE Act) was signed by the President yesterday, October 7, 2015, after passing the House and the Senate by unanimous voice vote last week.

The PACE Act allows each state to retain the definition of small employer at 50 or fewer employees for ACA small market reform purposes. Under small market reforms, employer-sponsored medical plans include billed rates by participant age, metal-tier plan designs, and essential health benefits.

Without this Act, the definition of small employer was set to increase to 100 or fewer employees starting in 2016. Under the PACE Act, states still have the option of defining a small employer as 100 or fewer employees.

Maryland issued Bulletin 15-27 today clarifying that Maryland will retain the 50 employee definition.

The District of Columbia and the majority of states, including Virginia, have also indicated a preference to keep the definition of small employer at no more than 50 employees. However, this may necessitate amended legislation. We will update you as soon as we have news from the District and Virginia.

Along with the potential need for amended legislation, most insurance carriers will need to refile 2016 medical renewal rates for employers with 51-100 employees. The process of getting renewal quotes changed from the small market back to the large market may delay the renewal process for affected employers. Please contact your Keller account team with any questions.


October 19 UPDATE: CMS issued a memo “Frequently Asked Questions on the Impact of PACE Act on State Small Group Expansion“. Included in the memo is CMS’s request for states to notify CMS by October 30, 2015 if the state elects to extend the small employer definition to up to 100 employees effective January 1, 2016.