President Obama Signs Law Permitting States to Define "Small Employer" Under the ACA for Purposes of Small Business Health Options Program (SHOP) Exchange

President Obama signed the Protecting Affordable Coverage for Employees (PACE) Act (H.R. 1624), which allows each state to determine the definition of "small employer" for purposes of the ACA within certain parameters. Only employers designated as a "small employer" may offer insurance coverage to employees through the SHOP exchange. This law stopped short of redefining the federal definition of small employer.

Prior to this legislation, the definition of "small employer" was an employer with fewer than 50 full-time employees (or full-time equivalents). Now, a state may define "small employer" as including employers with fewer than 100 full-time employees. As of January 1, 2016, employers in California with fewer than 100 eligible employees can enroll in SHOP. Importantly, this change does not impact the definition of small employer for purposes of the employer mandate.

The full text of H.R. 1624 is available at: