Nevada Health Exchange

By: Robert Pusateri, Capstone Brokerage

The Affordable Care Act created several new standards for private health insurance coverage. One part of these new standards is what determines if you have a small or large business. The law established federal definitions of “small employer” and “large employer” for health insurance markets. Prior to passing the healthcare reform law, states defined these markets on their own individual terms.

Currently and until 2016 states are still able to use the current standards when determining company size. Standard practice is a small employer can be either 50 and fewer or 100 and fewer employees depending on state. However, in 2016 when some of the final phases of the healthcare reform law are rolled out, the new Federal definition of “Small Employer” Verses “Big Employer” will affect many companies.

The definition of small employers will be considered those companies who, on average, have 1-100 employees in the preceding calendar year and at least one employee on the first day of the plan year. In 2014 one part of this law has established coverage to sole proprietors as small businesses. They are now able to obtain plans in the small group market.

The definition of large employers in 2016 will be considered those companies who, on average, have 101 or more employees in the preceding calendar year and at least one employee on the first day of the plan year.

One thing to keep in mind, these definitions are based on full-time equivalent calculation that accounts for both full-time and part-time employees. One exception to the employee count will be full-time seasonal employees who work fewer than 120 days during the year; these employees are excluded in the employers over all count.

Overall, group size definitions being part of the Affordable Care act may appear to bring uniformity, however there are many discrepancies in the law itself when mentioning company size. It seems that although the law may make group size more uniform by definition it doesn’t always apply in a consistent manner. One example of discrepancy, the medical loss ratio provision of the health care reform law changed the Public Health Service Act, however it didn’t change conflicting group size definitions in the act.

Some of the provisions also only consider full time employees not part time, thus making the size definition even more confusing to businesses. It is important to understand that the law has so many different layers that will affect every business. Remaining in contact with your broker will help your company stay on track based on your unique and individual company variables.