OREANDA-NEWS. October 08, 2015. Small businesses may have some good news on the way. Both the U.S. House and Senate recently voted to amend the Affordable Care Act (ACA) to give states more leeway in defining a small business. That change, if signed by President Obama, could mean more flexibility in coverage and better costs for some business that employ 51-100 people. 

The bill, House Resolution (H.R.) 1624, allows individual states to define a small employer as either 50 or fewer employees or 100 or fewer employees. Under the Affordable Care Act, the definition of small employer is set to expand on Jan. 1, 2016 to mean employer plans covering 100 or fewer employees. That change would come even if states wanted to maintain the definition of small group plans as those covering 2-50 employees. The new legislation would allow states to be the decision maker.

That legal distinction defines the small group insurance market, so it’s an important one for insurers and plan sponsors to know. Small group plans, by law, have strict requirements they must meet in terms of pricing and plan design. But large group plans have more flexibility in terms of underwriting and plan design, and that can bring the potential to offer less expensive plans.

The Congressional Budget Office (CBO) projects that the bill would save \\$400 million over the next decade. The bill, also known as the Protecting Affordable Coverage for Employees Act, now heads to the president’s desk for his signature or veto.