Compliance Alert: States Can Decide the Small Group Expansion

Last week, the President signed the Protecting Affordable Coverage for Employees (“PACE”) Act, which repeals the federally mandated expansion of small employer.  However, States have the discretion to expand or limit the size of employers in the small group market.  A number of states will likely follow the PACE Act definition, however, other States will require legislative action, which to date is uncertain.

States that will require additional legislative action are:

–          California, Colorado, Maryland, New York, Vermont, Virginia and the District of Columbia.

The reason for additional legislative action is that these States have already enacted legislation that redefines the small and large group markets.  In order for any change to take effect, these States must pass legislation to repeal previously passed State legislation.

State Legislators will be required to take quick action before the end of the year to make changes consistent with federal requirements.  However, it is much more likely changes will not be made and the small employer definition and small group expansion will occur in 2016. Stay tuned for further updates as information becomes available.

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