Tag Archive: ACA Section 1304(b)(3)

Massachusetts seeks federal OK to keep small group at 50 or fewer employees in 2016

Massachusetts has asked the federal Department of Health and Human Services to continue to allow the state to define its small group market as employers with 50 or fewer employees in 2016 as the state prepares to request a state innovation waiver application for an alternative plan for individual and small group health coverage under Section 1332 of the Patient Protection and Affordable Care Act. The law defines small employers as those employers with 100 or fewer full time equivalent (FTE) employees. However, Section 1304(b)(3) of the Affordable Care Act affords states the option – which all exercised – to set the metric at 50 or fewer employees for plan years 2014 and 2015.

Massachusetts Gov. Charles D. Baker made the request in an April 27, 2015 letter to Health and Human Services Secretary Sylvia Burwell. Baker cited the need to maintain stability in its merged individual and small group markets, citing premium rate increases for small employers under Affordable Care Act rules barring medical underwriting of small groups and the increased likelihood employers of 51 to 100 employees would opt to self insure in 2016. Both developments “will further exaggerate” instability in the state’s merged individual and small group markets and prompt Massachusetts to reconsider the continued operation of a merged market, Baker wrote.

(H/T to Elizabeth Elizabeth Osius of Manatt, Phelps & Phillips, LLP for the heads up on this development).

Baker’s letter follows a letter to Burwell earlier this year by 17 business groups and the National Association of Health Underwriters requesting the Affordable Care Act’s 2016 expansion of states’ small group health insurance market to employers of up to 100 employees be delayed until 2018. The groups warn broadening the scope of the small group market will lead to market disruption among health insurers that could limit employer coverage options as well as potentially result in premium increases.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

ACA small group market changes for 2016 could potentially benefit SHOP

The Patient Protection and Affordable Care Act holds two significant changes for the small group market taking effect for plan year 2016:

  • A mandatory definition of “small employer” as those employers with 100 or fewer full time equivalent (FTE) employees. Section 1304(b)(3) of the Affordable Care Act afforded states the option – which all exercised – to set the metric at 50 or fewer employees for plan years 2014 and 2015.
  • The delayed phase in under 2014 federal transition relief guidance of the large employer shared responsibility mandate. Under the guidance, the requirement that employers offer most employees health coverage meeting minimum benefit and affordability standards encompasses employers with 50-99 FTE employees starting in 2016.

Both alter the post-Affordable Care Act landscape of the small group market starting next year by expanding its parameters and providing greater incentive for small employers to offer health coverage. What remains to be seen is whether they will operate to expand small employer participation in the Small Business Health Options Program (SHOP) that all state health benefit exchanges must have in place unless they opt to combine their individual and small group exchanges as authorized by ACA Section 1311(b)(2). SHOP enrollment has been very weak in nearly all states relative to small group market as a whole.

A larger and more compulsory small group market could potentially boost SHOP’s prospects. But it won’t address the lack of strong economic inventive for small employers and their brokers to engage with the SHOP. The SHOP is predicated on pooling the purchasing power of small employers to drive down premiums that many small employers perceive as unaffordable. Gaining that purchasing clout with small group health plan issuers requires SHOPs first bring a lot more covered lives to the bargaining table – the classic chicken and egg conundrum.

Meanwhile, 17 business groups and the National Association of Health Underwriters have asked the U.S. Department of Health and Human Services in a February 18, 2015 letter to postpone implementation the 2016 mandatory definition of small employer to 100 or less employees to 2018, warning it would produce market disruption among health insurers that could limit employer coverage options as well as potentially lead to premium increases.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

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