ACA Definitions of "Large" & "Small" Employers

Updated: Jan 23

The Affordable Care Act (ACA) imposes different requirements on employers based on whether they qualify as a "large employer" or a "small employer." However, the health care reform law doesn’t use a consistent definition for these terms. As a result, an employer may be considered a small employer for one rule but a large employer for another.

This ACA Overview outlines the definitions of “large employer” and “small employer” that apply to key provisions in the ACA affecting employers. It also contains a chart on the ACA requirements that vary based on a group plan’s size.

Links & Resources

  • On Oct. 7, 2015, President Obama signed into law the Protecting Affordable Coverage for Employees (PACE) Act, which repealed the ACA’s small group market expansion requirement.

  • As a result, states now have the option, but are not required, to expand their small group markets to include businesses with up to 100 employees.

  • The PACA Act does not affect the definitions included in the first chart in this document, including the definition of an applicable large employer for purposes of the ACA’s employer shared responsibility rules.

Requirements that Vary Based on Group Size

The ACA also imposes certain plan-related requirements that are based on group size instead of employer size. These requirements vary based on whether the plan is in the large group market or the small group market. The terms “large employer” and “small employer” are defined at the federal level in the ACA. In contrast, “small group market” size and “large group market” size are determined based on state law. This means that different states have different definitions of what qualifies as large group or small group.

The PACE Act repealed the ACA’s small group market expansion requirement. As a result, states now have the option, but are not required, to expand their small group markets to include businesses with up to 100 employees. This law does not affect the definitions listed above, including the definition of an applicable large employer for purposes of the ACA’s employer shared responsibility rules. The following chart provides an overview of the requirements that vary based on a group plan’s size. To determine the definitions of large group market or small group market that apply in your state, please consult state law.


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