The Affordable Care Act (ACA) defines a small employer as one with up to 100 employees, but the law gave states the ability of using a definition of up to 50 employees until the end of 2015. As a result, most states, including Illinois, used a definition of up to 50 employees. However, that will change in 2016, and all states will be required to classify their small group market as up to 100 employees.

Why does this matter?

The ACA imposes several rules and regulations on employers in the small group market. Some of these rules include, but are not limited to the following:

• Small group plans must cover all 10 essential health benefits with unlimited annual and lifetime maximums.
• Small group plans must meet specific actuarial values and health plans will be classified as Bronze, Silver, Gold or Platinum.
• No rate increases for medical history can be applied to small group health plans.
• Small group plans must use adjusted community rates. This means each employee will be charged a different rate which can only vary by age, family size, geographic location and tobacco usage. 

Health coverage offered by employers with 51-100 employees will be significantly impacted by the reclassification of the small group market.* These employers have generally been subject to large group market regulations up to this point, and that will all change on the first plan year on or after January 1, 2016. Most of these health plans will not meet the benefit and rating requirements that apply to the small group market, and absent any changes or delays in the regulations, these health plans will have to be discontinued. 

Some employers with 51-100 employees will be charged higher overall premiums as a result of these changes. We may see these employers looking to change their renewal date to December 1st or December 15th to delay the impact of the changes until the end of 2016. On the other hand, some employers of this size that may be covering a group of employees with higher than average medical costs may see a decrease in overall premiums. These employers will most likely welcome this change.  

*Grandfathered health plans will not be impacted by this change.