The Senate today passed legislation that makes possible a repeal of the Affordable Care Act’s controversial expansion of the definition of a small employer, a bill hailed by the benefits industry for protecting the small and mid-size businesses they feel the expansion threatens to harm.

The Protecting Affordable Coverage for Employees Act (PACE) passed the House in a unanimous vote earlier this week. With its passage in the Senate, it now moves to President Obama’s desk to be signed into law, but it is expected to be vetoed.

See also: “House votes unanimously to repeal ACA small group market expansion

The legislation would rescind the ACA’s expanded definition of a small employer. The bipartisan legislation has had strong support from employers and benefit industry insiders who feared the expansion could lead to premium increases and jeopardize the ability for small and mid-sized businesses to compete in today’s market.

“The Big ‘I’ is grateful for today’s Senate action on this common-sense legislation that addresses a significant flaw in the Affordable Care Act,” says Charles Symington, Big “I” senior vice president for external and government affairs. “Enactment of this legislation is vital to keeping small to mid-size businesses from seeing significant premium increases and appropriately gives states the authority to determine the small group market definition in the future. We urge the President to promptly sign this important ACA change into law.”

The ACA proposes that effective Jan. 1, 2016, the definition of a small group employer increases from 1-50 employees to 1-100 employees. The Protecting Affordable Coverage for Employees Act (PACE) would maintain the current definition of a small group market as 1-50 employees and give states the flexibility to expand the group size if they feel the market conditions in their state necessitate the change.

The PACE Act, “will help preserve existing health insurance options for medium-sized businesses, preventing significant increases in premiums, and reducing the compliance burden for small businesses, particularly those that purchase fully insured coverage,” says Les McPhearson, CEO of United Benefit Advisors.

See also: “Employer groups urge repeal of ACA small group market expansion

The expansion is intended to make insurance more affordable for the smallest employers by expanding the risk pool to include larger companies. It also aims to increase the number of participants in the ACA’s Small Business Health Options Program, also known as the SHOP exchanges.

The expanded definition would, among other things, mean the ACA’s small group rating limitations would apply to more employers, many that were previously considered large employers.  Large employer rates are set using various factors such as claims history, industry and location. In the small group market, carriers can set rates based only on age, family size, geography, and, in most states, tobacco use.

 

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