Amendment to the Definition of Small Employer Under the Patient Protection and Affordable Care Act.

On October 8, 2015, the President signed the Protecting Affordable Coverage for Employees (PACE) Act, amending the Patient Protection and Affordable Care Act (PPACA). The amendment modifies a portion of the small employer mandate that was set to take effect in 2016. Under the original provisions of the PPACA, the definition of a small employer would increase to 100, from 50 full time employees, on January 1, 2016.

This amendment leaves the definition at 50 full time employees, unless a state legislature acts and raises the definition to 100 full time employees. This will have a substantial impact on businesses with 51-100 full time employees because the PPACA mandates vary based upon whether an employer is a small or large employer, as defined under the act.

For the state legislatures that previously adopted laws to comply with the definition changes in 2016, the legislature will have to act in order to leave the definition of a small employer at 50 full time employees. Should the state fail to act, the definition of a small employer will change to 100 full time employees on January 1. Neither Nebraska or Iowa previously acted and the definition will remain at 50 full time employees unless the state legislature changes the definition.

© 2015 Houghton Vandenack Williams
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