Here is IDOI Bulletin 221, which addresses a “new” small group definition effective 1-1-16. In addition, there is an extensive FAQ which provides guidance on exactly how Indiana will define a small group for purposes of providing employer health coverage. We are aware that there are concerns associated with this definition and are in process of addressing them with ISAHU sister organizations and the IDOI. As more information becomes known, we will do our best to get it out to our members.
Small Employer Definition
This Bulletin is directed to all insurers issuing policies of accident and sickness insurance, as defined at IC 27-8-5-1; all HMOs as defined at IC 27-13-1-19; and all Hoosier employers purchasing accident and sickness insurance policies in the group market. The purpose of this Bulletin is to provide guidance on how Indiana will define a small group for purposes of providing employer health coverage.
Under the ACA, the definition of small employer was set to change effective January I, 2016, and increase a small employer from one who employs one to 50 employees to one who employs one to 100 employees. However, the recently enacted PACE Act (H.R. 1624 — 114th Congress), prevents that change from happening. Unless a state chooses to define a small employer as having up to 100 employees, the definition of small employer will remain at one to 50 employees.
Indiana’s small employer group health insurance law under IC 27-8-15-14(a) has long defined a small employer as one who employs up to 50 people.
As used in this chapter, “small employer” means any person, firm, corporation, limited liability company, partnership, or association actively engaged in business who, on at least fifty percent (50%) of the working days of the employer during the preceding calendar year, employed at least two (2) but not more than fifty (50) eligible employees, the majority of whom work in Indiana. In determining the number of eligible employees, companies that are affiliated companies or that are eligible to file a combined tax return for purposes of state taxation are considered one (1) employer.
Indiana will continue to consider a small employer to be one who employs not more than 50 employees. However, a difference in how to count employees has caused confusion in the market; therefore, the Department will issue an emergency rule to conform Indiana’ s definition of an “employee” for determining group size to the federal definition.
Subject to Indiana emergency rulemaking authority granted in IC 27-8-15-14(b), the Department will define a small employer as one that employed an average of at least one but not more than fifty employees on business days during the preceding calendar year and who employs at least one employee on the first day of the plan year. Following ERISA guidance, an employee is any individual employed by an employer but not an individual owner or partner. Part-time and seasonal employees should be counted. This rule will apply to any non-grandfathered, ACA-compliant plans with an effective date on or after January 1, 2016.
Previously, to avoid the disruptions that may have occurred with a change in the definition of a small employer, the Department issued Bulletin 215, which allowed for transitional policies for employers with 5 1-100 employees to continue through renewal no later than October I, 2016. Because of the PACE Act, those policies will now continue to be large group policies. For that reason, Bulletin 215 is hereby withdrawn. However, those large group policies with 51-100 employees issued in 2015 may be renewed until October 1, 2016. After that period, they must transition to a fully compliant ACA policy.
Another calculation determined by group size is medical loss ratio. In 2011 the Department issued Bulletin 1 85, which provided that groups of one to 100 employees were considered small group for purposes of calculating medical loss ratio (MLR). This policy will not change; therefore, for plan years beginning before January 1, 2016, premium rebate requirements of the ACA continue to apply in the small group market in Indiana only if the medical loss ratio is less than 80%. For plan years beginning on or after January I, 2016, groups of 51+ employees will be considered large group for purposes of calculating the MLR.
Additional questions and examples are available within a small group FAQ found on the Department’s web site. Questions regarding this Bulletin should be directed to compliance@idoi.IN.gov.
Indiana Group Counting FAQ
- Is an owner counted in determining group size?
- 29 CFR 2510.3-3(c) provides, “An individual and his or her spouse shall not be deemed to be employees with respect to a trade or business, whether incorporated or unincorporated, which is wholly owned by the individual or by the individual and his or her spouse.
- How are employees counted in determining group size for purposes of quoting coverage?
- The number of employees for determining group size shall use PHS Section 2791(d)(5) which states that the term “employee” has the meaning given such term under section 3(6) of Title I of the Employee Retirement Income Security Act (ERISA). As defined by this section of ERISA, the term “employee” means any individual employed by an employer.
- How will MLR be calculated for small group?
- For small group (1-50 employees) the MLR will remain 80%.
- For large group (51-100) the MLR remains 80% for plan years through the end of 2015.
- For large groups (51+ employees) the MLR will be 85% starting January 1, 2016.
- How are part time, transitional or seasonal employees counted in determining group size?
- ERISA dictates that the term “employee” means any individual employed by an employer. As such, part time, transitional or seasonal employees must be counted towards the overall group size of an employer.
- Is there a difference in counting the number of employees for SHOP participation as opposed to determining group size?
- Eligibility for participation in the SHOP uses a different method: a full time equivalent calculator without inclusion of seasonal employees. For additional information on the calculation of full time equivalents, please visit: https://www.healthcare.gov/shop-calculators-fte/
- Can an insurance company write or renew a historical small group non-grandfathered policy to a newly redefined 51+ group employer?
- Employers who employ 51+ employees will need to be issued a large group policy, except that such groups that were covered under the previous small group definition in 2015 may be renewed on a small group policy in through October 1, 2016.
- Is Bulletin 215 being withdrawn?
- To avoid disruptions that may have occurred with a change in the definition of a small employer, the Department issued Bulletin 215, which allowed for transitional policies of employers with 51-100 employees to continue through October 1, 2016. Because of the PACE act, those policies will now continue to be ACA-compliant policies and will not be considered transitional, except as set out in FAQ #7. For that reason, Bulletin 215 is withdrawn.
- Where do I put information for groups in the range of 51-100 in the Supplemental Health Care exhibit for the 2015 and 2016 plan year?
- For 2015, groups 51-100 should be shown in the small group column.
- For 2016, groups 51-100 should be shown in the large group column.
- Can a group with 51-100 employees that has been offered a grandmothered or transitional policy continue on that grandmothered or transitional policy in 2016?
- Yes. Those large group policies with 51-100 employees offered grandmothered or transitional policies in 2015 may be renewed until October 1, 2016. Policies renewed after October 1, 2016, must be renewed as a fully compliant ACA large group policy.
- Can an insurance company now file new small group rates effective January 1, 2016?
- Federal law does not allow new small group rates to be filed now effective January 1, 2016. Rates can be changed effective April 1, 2016, subject to regular filing and approval deadlines.
- Is Bulletin 185 being withdrawn?
- No. The MLR for small group policies 1-100 remains in effect through December 31, 2015.
- If I have employees in two different states, how do I determine my group size?
- Group size should be based on the total size of the employer entity filing taxes for federal tax purposes and based on the law of the state of the company’s headquarters, regardless of the employees’ location.
- Does the enactment of the PACE Act affect the counting methodologies to be used by the SHOPs in accordance with Internal Revenue Code section 4980H(c)(2), and for purposes of the medical loss ratio (MLR), risk adjustment, and risk corridors programs?
- No. The requirements regarding the employee counting methodologies for the FF-SHOPs and State-based SHOPs, and for the MLR, risk adjustment, and risk corridors programs remain the same, and are not changed by the PACE Act.
View the original FAQ [pdf]