On September 9, 2015, the U.S. House Energy and Commerce Subcommittee on Health (Subcommittee) held a hearing on H.R.1624 (S. 1099), the “Protecting Affordable Coverage for Employees,” or PACE Act, which was introduced as a bipartisan bill in the spring of this year. The PACE Act seeks to amend the definition of “small group” employer, as defined under the Affordable Care Act (ACA) as employers with 1-100 employees, in order to provide state insurance regulators with the flexibility to define the small group market in his or her jurisdiction.
Because state insurance laws and regulations typically define small group employers as those employers with 1-50 employees, the ACA allows states a transitional period, until January 1, 2016, to continue to define small group employers as those employers with 1-50 employees. Under the ACA, however, as of January 1, 2016, those plans sold or renewed for employers with 51-100 employees would be moved into the small group market and subject to the small group health plan regulations established thereunder. Such a move would require mid-sized employers to comply with new mandates regarding essential health benefits, age rating and cost-sharing restrictions, among others, potentially increasing premiums an estimated 18 percent on average for a majority of those impacted.
Recognizing the potential issues created by the ACA mandates, the U.S. Department of Health and Human Services has indicated in published guidance that it will not enforce the requirements for employers with 51-100 employees if the employer’s health plan is renewed on or before October 16, 2016 --- essentially delaying the effective date of the regulation until October 16, 2017. The PACE Act, however, provides a more definite solution to the issue by “tweaking” the ACA in order to allow states the ability to determine who constitutes a small group employer for purposes of health insurance, so that each state may address the issue depending on the needs and demands of its particular market.
The bi-partisan legislation is supported by, among others, the Council for Affordable Health Coverage and 50-100 Coalition, alliances of groups representing the interests of millions of businesses countrywide. Washington State Insurance Commissioner Mike Kreidler, who widely supports the ACA, testified against the PACE Act at the hearing before the Subcommittee, stating that the bill would significantly harm the improvements made under the ACA and disrupt the market because many health insurers already have filed their group plans for 2016. Monica J. Lindeen, Montana Commissioner of Securities and Insurance and President of the National Association of Insurance Commissioners (NAIC), testified on behalf of the NAIC in support of the bill, urging the immediate passage of the PACE Act in order to enable each state to address the characteristics and needs of its small group market and avoid disruption in the marketplace. In the meantime, employers, insurers and regulators continue to try to maintain stability and flexibility while Congress continues to contemplate the issue.
A copy of the bill may be accessed at https://www.congress.gov/bill/114th-congress/house-bill/1624.