The new health care reform law established, for the first time, federal definitions of “small employer” and “large employer” for health insurance markets. Prior to the passage of this legislation, states defined these markets for themselves.
Here are the new rules:
- From now until 2016, states can define the size of small employer groups as either 50 and fewer employees, or 100 and fewer.
Colorado has defined “small employer” for group insurance purposes as 50 or fewer, and there doesn’t seem to be any rush to change this with the passage of federal law, for now.
Beginning in 2016, the new definitions will apply – businesses with, on average, 1-100 employees in the preceding calendar year will be “small employers”. “Large employers” will be those who had, on average, 101 or more employees in the preceding calendar year (and at least one employee on the first day of the plan year).
For employers who are used to calculating COBRA continuation eligibility, the full-time calculation accounts for both full-time and part-time employees, using the same general formula (part-time employees counted as fractions).
TIP: Full-time seasonal employees who worker fewer than 120 days during the year are excluded.
There are inconsistencies in the application of these new federal definitions that will need to be ironed out, assuming the entire health reform act isn’t amended, repealed and replaced, or successfully challenged in court.