The Centers for Medicare & Medicaid Services (CMS) has released a set of FAQs that address how the revised small employer definition under the PACE Act will affect state definitions.
Background of the PACE Act
The PACE Act, which became effective October 7, 2015, amended the Affordable Care Act (ACA) to revise the small and large employer definitions for purposes of certain market reform requirements under the law, such as the requirement to cover essential health benefits. Specifically, the PACE Act defines small employers as those with an average of 1-50 employees on business days during the preceding calendar year, and large employers as those with an average of at least 51 employees on business days during the preceding calendar year. The law also gives states the option to extend the definition of small employer to those who employ an average of at least 1 but not more than 100 employees on business days during the preceding calendar year.
Note: The definition of applicable large employer under the ACA’s “pay or play” and information reporting provisions (which generally includes employers with at least 50 full-time employees, including full-time equivalent employees, on average during the prior year) was not changed as a result of the new PACE legislation.
The FAQs clarify that any state action that extends the definition of a small employer to include employers with up to 100 employees that is legally binding on health insurance issuers in the state will constitute an election to extend the small employer definition for purposes of the PACE Act. If a state makes this election, the definition of small employer must be applied uniformly to all health insurance issuers in the state, including those in the Small Business Health Options Program (SHOP).
States that elect to extend the small employer definition to up to 100 employees for coverage effective January 1, 2016, are requested to notify CMS of their election by October 30, 2015 at firstname.lastname@example.org. States that elect to extend the small employer definition with another coverage effective date are requested to notify CMS as soon as practicable.
Please review the FAQs in their entirety for additional information.
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