With little apparent Democrat opposition, the U.S. House of Representatives on September 28 routinely passed a bill to allow employers of 50 to 100 employees to avoid the ACA’s especially heavy regulation of small group health plans beginnning in 2016, subject to state rules to the contrary. The lack of controversy suggests that this bill may actually be passed by the Senate and be signed by the President.

If H.R. 1624 becomes law, ACA § 1304(b) (42 U.S.C. § 18024(b)), distinguishing “large employers” from “small employers,” for the purpose of distinguishing the “large group market” (less regulated) from the “small group market” (more regulated), would be amended as follows.  The text to be deleted from current law is in strike-though font.  The text to be added is underlined.

(b) Employers

In this title:

(1) Large employer

The term ‘‘large employer’’ means, in connection with a group health plan with respect to a calendar year and a plan year, an employer who employed an average of at least 101 51 employees on business days during the preceding calendar year and who employs at least 1 employee on the first day of the plan year.

(2) Small employer

The term ‘‘small employer’’ means, in connection with a group health plan with respect to a calendar year and a plan year, an employer who employed an average of at least 1 but not more than 100 50 employees on business days during the preceding calendar year and who employs at least 1 employee on the first day of the plan year.

(3) State option to treat 50 employees as small

In the case of plan years beginning before January 1, 2016, a State may elect to apply this subsection by substituting ‘‘51 employees’’ for ‘‘101 employees’’ in paragraph (1) and by substituting ‘‘50 employees’’ for ‘‘100 employees’’ in paragraph (2). Notwithstanding paragraphs (1) and (2), nothing in this section shall prevent a State from applying this subsection by treating as a small employer, with respect to a calendar year and a plan year, an employer who employed an average of at least 1 but not more than 100 employees on business days during the preceding calendar year and who employs at least 1 employee on the first day of the plan year.

Also, PHS Act § 2791(e) (42 U.S.C. § 300gg-91(e)) would be amended as follows:

(e) Definitions relating to markets and small employers

For purposes of this subchapter:

(1) Individual market

(A) In general

The term “individual market” means the market for health insurance coverage offered to individuals other than in connection with a group health plan.

(B) Treatment of very small groups

(i) In general

Subject to clause (ii), such terms includes coverage offered in connection with a group health plan that has fewer than two participants as current employees on the first day of the plan year.

(ii) State exception

Clause (i) shall not apply in the case of a State that elects to regulate the coverage described in such clause as coverage in the small group market.

(2) Large employer

The term “large employer” means, in connection with a group health plan with respect to a calendar year and a plan year, an employer who employed an average of at least 101 51 employees on business days during the preceding calendar year and who employs at least 2 employees on the first day of the plan year.

(3) Large group market

The term “large group market” means the health insurance market under which individuals obtain health insurance coverage (directly or through any arrangement) on behalf of themselves (and their dependents) through a group health plan maintained by a large employer.

(4) Small employer

The term “small employer” means, in connection with a group health plan with respect to a calendar year and a plan year, an employer who employed an average of at least 1 but not more than 100 50 employees on business days during the preceding calendar year and who employs at least 1 employee on the first day of the plan year.

(5) Small group market

The term “small group market” means the health insurance market under which individuals obtain health insurance coverage (directly or through any arrangement) on behalf of themselves (and their dependents) through a group health plan maintained by a small employer.

(6) Application of certain rules in determination of employer size

For purposes of this subsection—

(A) Application of aggregation rule for employers

all persons treated as a single employer under subsection (b), (c), (m), or (o) of section 414 of title 26 shall be treated as 1 employer.

(B) Employers not in existence in preceding year

In the case of an employer which was not in existence throughout the preceding calendar year, the determination of whether such employer is a small or large employer shall be based on the average number of employees that it is reasonably expected such employer will employ on business days in the current calendar year.

(C) Predecessors

Any reference in this subsection to an employer shall include a reference to any predecessor of such employer.

(7) STATE OPTION TO EXTEND DEFINITION OF SMALL EMPLOYER.—Notwithstanding paragraphs (2) and (4), nothing in this section shall prevent a State from applying this subsection by treating as a small employer, with respect to a calendar year and a plan year, an employer who employed an average of at least 1 but not more than 100 employees on business days during the preceding calendar year and who employs at least 1 employee on the first day of the plan year.