Gov. Perry signs legislation aimed at new healthcare law

Legislation signed by Gov. Rick Perry will allow thousands of Texas businesses to keep for now their status as large employers and avoid additional regulations that businesses considered to be small employers may face as a result of the Affordable Care Act (ACA).

SB 1332, sponsored by Sen. Robert Duncan (R-Lubbock) and Rep. John Smithee (R-Amarillo) amends Texas law to allow for the inclusion of part-time employees in the methodology used to classify a business as a large or small employer. Current Texas law defines a small employer as an entity that employs 2-50 employees and a large employer as a business with 51 or more employees. Current law does not include part-time employees in that methodology.

SB 1332 redefines large and small employers using the total number of employees, including those that are part-time, rather than defining eligible employees as those who work 30 hours or more. The legislation amends the state insurance code to apply provisions of the Health Insurance Portability and Availability Act to health benefit plans of small and large employers using the new methodology.

Effective January 1, 2014, for the purposes of implementing the ACA, the federal government will define a small employer as an entity that employs 1-100 employees, meaning that some employers currently considered to be large employers in Texas (51-100 employees) will be reclassified as small employers. Actuarial studies of new rating requirements that will apply to small employers have projected premium increases ranging from 40-100 percent. SB 1332 will allow those businesses to avoid the higher premiums and small employer regulations of the ACA.

The ACA’s “pay or play” provision requiring employers with more than 50 employees to provide insurance coverage will still apply.

SB 1332 was a legislative priority of the Texas Association of Health Underwriters. The measure was also supported by the Texas Association of Business and National Federation of Independent Businesses.

“Our goal in championing the legislation was to help this group of Texas employers avoid premium rate shock as a result of changes in federal law,” said Kelly Fristoe, president of TAHU.

Fristoe continued, “The ACA will bring tough changes for many Texas businesses, but SB 1332 will help ease the burden for thousands of employers, workers and their families. We applaud and thank Sen. Duncan and Rep. Smithee for their leadership in providing this relief for Texas businesses.”