On Wednesday, October 7, 2015, President Obama signed H.R. 1624, the Protecting Affordable Coverage for Employees Act (PACE Act). With the enactment of the PACE Act, federal law that would have increased the number of employees in the definition of small group to 100 or less has been repealed. Instead, the definition will remain consistent with Wisconsin's definition of a small employer, and Wisconsin law is no longer preempted.
The PACE Act changes the federal definition of both large employer and small employer under 42 U.S.C. 18024(b) as follows:
(1) LARGE EMPLOYER.
The term "large employer" means, in connection with a group health plan with respect to a calendar year and a plan year, an employer who employed an average of at least
101 51 employees on business days during the preceding calendar year and who employs at least 2 employees on the first day of the plan year.
(2) SMALL EMPLOYER.
The term "small employer" means, in connection with a group health plan with respect to a calendar year and a plan year, an employer who employed an average of at least 1 but not more than
100 50 employees on business days during the preceding calendar year and who employs at least 1 employee on the first day of the plan year.
Wisconsin law is consistent with the new federal definition. Under s. 635.02 (7) (a), Wis. Stat., small employer is defined as:
(a) "Small employer" means, with respect to a calendar year and a plan year, an employer that employed an average of at least 2 but not more than 50 employees on business days during the preceding calendar year, or that is reasonably expected to employ an average of at least 2 but not more than 50 employees on business days during the current calendar year if the employer was not in existence during the preceding calendar year, and that employs at least 2 employees on the first day of the plan year.
As result, the Wisconsin definition is no longer preempted.
First Quarter Rate Filing:
Most insurers who filed small group rate changes did so before May 15, 2015. Since the definition of what constitutes a small employer has changed, these rate filings, which included the single risk pool filings for groups 1-100, may no longer reflect an insurer's experience. Insurers may wish to re-file their 2016 first quarter rates. Insurers are NOT required to re-file rates or to make any changes to the first quarter or subsequent quarter rates. Under Wisconsin law insurers have the option to file rate changes up to 30 days after use. If you wish to make changes to your first quarter rates, please contact the OCI rate review team.
For plans offered in the SHOP exchange, or in cases where the rate change exceeds the federal 10% rate review threshold, federal law requires filing of rates with CCIIO. At the time of the bulletin, it appears CCIIO will not allow any new rate filings for the first quarter of 2016 despite the significant federal law change. While Wisconsin law would allow for the filing of rates in these categories, federal rate review requirements may prevent such a filing from taking effect.
It remains Wisconsin's position that federal law does not preempt state law in rate filing.
Second Quarter Rate Filing:
Under the 2016 Unified Rate Review Instructions, SHOP exchange quarterly rate changes must be submitted at least 105 days prior to the effective date of the rate change. Quarterly submissions must be finalized at least 45 days prior to the effective date. As a result, insurers must file any proposed second quarter changes by December 17, 2015. Insurers are NOT required to make changes to their second quarter rates. Insurers who have questions on rate changes should contact the OCI rate review team.
If you have any questions, please e-mail J. P. Wieske at