by Pam Hillier

Small Group vs. Large Group?


In 2016, the definition of a “small group employer” under the ACA expands from 1-50 employees to include employers with 51-100 employees. Analysts say that this change affects over 150,000 employers with more than 3 million workers. The change in the definition is creating confusion amongst many people about what this expansion of the size of a small group employer really means – AND what it doesn’t.

The ACA defined a large group employer generally as one that employed over 50 full time employees. What most were concerned about was that they then were considered to be an “Applicable Large Employer” for purposes of the employer shared responsibility provision of the ACA and were mandated to provide coverage to their eligible employees or face penalties payable to the IRS.

Interestingly enough, this provision remains in place and while an employer with 51-100 employees is now going to be considered a small group employer in 2016, they’ll also still be considered an applicable large employer with all that goes along with it.

What will change for this segment of employers however is how they’re premium is developed for fully insured group health coverage as well as the rules that will be imposed and must be abided by as a small group employer.

Unfortunately, many employers and their employees are likely to be affected by the change in the small group definition due to more restrictive rating rules which are likely to increase relative premium for many current groups in this segment, although it is conceivable that some could come through relatively unscathed….it is highly unlikely.

Many states, Michigan being one, have allowed these newly defined small group employers to delay entering the ACA-compliant marketplace until after their 2016 plan year ends. Groups between 51-100 that face higher costs or less attractive benefit plans by moving to an ACA-compliant small group plan are quite likely to renew their current plans into 2017 to hold off the potential negative impact of the change a little longer.

It’s not a stretch to say that based on their “too big but not big enough” size category, these 150,000 (50-100 group size) employers and their employees are amongst some of the most negatively impacted and burdened amongst us from a financial standpoint – relatively speaking – by the ACA.

National healthcare open enrollment starts November 1st and ends on December 15th. To make an appointment with one of our trusted advisors please contact us at 906.228.7500.

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