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Potential Impact of Small Group Reclassification under the Affordable Care Act

Here is an overview of the potential impact that Small Group reclassification under the Affordable Care Act may have on your business --- via CBG Benefits.Earlier this month, Massachusetts’ Governor Charlie Baker submitted a request to the federal government that they delay changes in the state’s small business health insurance market. This delay was requested until the state can formally file for a waiver.

In addition to requesting a reprieve from the Affordable Care Act’s rating factor changes, Gov. Baker also requested that Massachusetts be allowed to continue to limit the size of businesses that qualify for small group insurance to 50 employees. As of January 1st, 2016, the ACA expands the small group definition to employers with up to 100 employees.

The American Academy of Actuaries recently published a brief that highlights how organizations (primarily those that are currently in the 51-100 range) may be impacted by this change. Here are two of the noteworthy points made throughout the brief:

  • Groups that are currently in the 51-100 range will face more restrictive rating rules. For some, this will mean that they will face an increase in relative premiums, as they will now be pooled together for premium rating purposes.
  • Groups that are currently in the 51-100 range will face additional benefit and cost-sharing requirements. For instance, these groups will be subject to the essential health benefits requirement, which defines the set of health care service categories that must be covered by plans. This may reduce benefit flexibility and increase premiums.

Additional Information and Options

Will your company be impacted by this change? The brief from the American Academy of Actuaries pointed out that this change “could affect over 150,000 establishments with more than 3 million workers“.

Of course, there is certainly the possibility that the timeline could be extended, or that specific states will be granted reprieves. We encourage you to please stay tuned to CBG Benefits for more information on this topic.

Also, if you are interested in learning how your company could take advantage of alternative funding options — such as self-funding its employee benefits program — to help you remain compliant while also keeping your costs down, please contact our team today.

You may reach us at 781-759-1222 or via email at info@CBGBenefits.com.

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Posted in: Benefits and Insurance, Human Resources, Legislation

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