Calif. Exchanges To Implement Expanded Definition of Small Business

Covered California and private insurance exchange CaliforniaChoice will move forward with an expansion of the definition of small employers under state law, despite a new federal law that halts the change, the Sacramento Business Journal reports (Robertson, Sacramento Business Journal, 10/19).

Background

Earlier this month, President Obama signed into law legislation (HB 1624) stopping an ACA provision that would have changed the definition of "small employers" from taking effect.

Under the ACA, small businesses must offer employees health plans that meet the law's essential benefits requirements. The ACA provision would have defined a small business as one with 100 or fewer employees, whereas most states define a small business as one with 50 or fewer employees. Companies that would have fallen into the new small business definition would have had to comply with the ACA's requirements on employee health plans and enter the small-group insurance market by Jan. 1, 2016.

However, states still can choose to expand the definition of a small business on their own (California Healthline, 10/8).

State Requires Expanded Definition

In California, state law requires businesses with 100 or fewer employees to be considered small employers starting next year. Lawmakers would need to convene a special session before the end of the year to cap the definition at 50 employees, according to the Business Journal.

As of Aug. 15:

• CaliforniaChoice had about 12,700 employers in its program and 220,000 policyholders; and
• Covered California had 2,865 employers and 19,465 policyholders.

Ron Goldstein -- president and CEO of Choice Administrators, which operates CaliforniaChoice -- said the broader definition of small businesses is "a real boon for both us and Covered California," noting, "It allows us to make inroads into the (larger) market" (Sacramento Business Journal, 10/19).