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Organizations with 51-100 Employees Can Maintain Large Employer Status

Oct 27, 2015

On October 7, 2015 President Obama signed into law the Protecting Affordable Coverage for Employees (PACE) Act, allowing organizations with 51-100 employees to maintain large employer status

Previous to the PACE Act, January 1, 2016 marked the day that employers with 51-100 employees were slated to have their status changed to small employer, resulting in a host of ACA requirements not mandated for large employers. These include: coverage of 10 essential health benefits; participation in the risk adjustment program (including a single risk pool for setting premiums); use of ACA actuarial value levels (platinum, gold, silver and bronze); and setting rates according to the limited values of age, geographic location, family composition and tobacco use.  In essence, this meant that organizations of 51-100 employees would be in the unique position of having to both adhere to the ACA employer mandate (as an applicable large employer (ALE)) while also having to adhere to the specific guidelines for small businesses.

Advocates of the original law say that expanding small employer status would help reduce costs and stabilize the SHOP marketplace for employers with less than 25 employees. However, those opposing the original law argued that it would raise premium costs for larger employers (still less than 100 employees), reduce flexibility of plan offerings, and possibly cause some current employer plans to be eliminated.

Despite the new PACE Act being signed into law, there is a caveat: individual states can override this new law by choosing to maintain the small employer status for organizations with 51-100 employees. This decision may be based on market conditions and state legislature.

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The information and materials herein are provided for general information purposes only and are not intended to constitute legal or other advice or opinions on any specific matters and are not intended to replace the advice of a qualified attorney, plan provider or other professional advisor. This information has been taken from sources believed to be reliable, but there is no guarantee as to its accuracy. This communication does not constitute a legal opinion and should not be relied upon for any purpose other than its intended educational purpose.

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