Broad Congressional, Industry Support For Change To Obamacare “Small Employer” Provision

Date: September 22, 2015

Legislators, Industry Groups Work To Prevent Reclassification Of Small Businesses Under Health Law

Beginning Jan. 1, 2016, one of the more burdensome provisions of Obamacare goes into effect – businesses with between 51 and 100 employees will now be classified under the healthcare law as a “small employer”, meaning they, along with employers having 50 or fewer employees, will have to begin offering certain levels of healthcare to employees. As New York Times reported, this package of “essential health benefits” may in some instances mean employers will have to provide coverage that is “more generous” than that currently offered. Furthermore, insurers won’t be able to set healthcare premiums for these businesses based on currently-used factors like business size, industry, and claims history. This change has prompted an outcry from employers, insurers, and a bipartisan group of legislators. The Times noted that 229 House members, including 43 Democrats, have backed the Protecting Affordable Coverage For Employees Act, introduced in the House in March by Rep. Brett Guthrie (R-KY). The measure would enable states to maintain the current definition of a small employer as one with 50 or fewer employees. In the Senate, 43 senators, including 10 Democrats, have endorsed the measure. Big-name supporters for the measure include Sen. Chuck Schumer (D-NY) and Sen. Jeanne Shaheen (D-NH), who is the senior Democrat on the Small Business and Entrepreneurship Committee. Additionally, the NFIB, Blue Cross Blue Shield, and US Chamber of Commerce are supportive of the measure.

What Happens Next

The PACE Act was introduced in the House and referred to the Healthcare subcommittee. It’s unclear if the measure will be able to pass before the end of the year. For now, the original Obamacare provision remains in effect, meaning the small employer classification will change Jan. 1.

What This Means For Small Businesses

Obamacare is a growing burden for the small business community. If the small employer provision is implemented Jan. 1, there may be dire consequences. As the Times quoted Montana insurance commissioner Monica Lindeen as saying, “Market disruptions could occur” as a result of the classification change. Delaware insurance agency Nicholas Moriello pointed to inconsistencies in Obamacare that have essentially led to “two contradictory provisions” for employers with 51 to 100 employees. These employers will be forced to “offer coverage to workers or pay a tax penalty” like larger employers, but “will be defined and regulated as small employers.” Ultimately, small businesses will suffer due to the costly, inconsistent bureaucracy of Obamacare.

Additional Reading

NFIB previously noted the pending change to the small employer classification.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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