Despite some technical glitches and delays, the Health Insurance Marketplace established by the Affordable Care Act (ACA) is officially open for business. That includes the separate online marketplaces for small business owners known as the SHOP exchanges. Our friend Jason Cogdill, Corporate Counsel & Benefits Attorney over at ProBenefits, Inc., has provided us an update on the SHOP exchanges, which are sharing via the excerpts below.
“I continue to receive a lot of questions on the SHOP exchange for small employers, which is opening for 2014 as part of the Marketplace,” Jason notes. To help answer some of those questions, here are five things small business owners need to know about the new SHOP exchanges:
1. What is SHOP?
The Small Business Health Options Program, or SHOP, is an online health insurance marketplace established as part of the Affordable Care Act. Every state is required to establish a SHOP exchange, whether run by the state or facilitated by the federal government. The SHOP exchanges are designed to allow you to offer your employees a choice of approved Quality Health Plans (QHP) the same way large employers can, giving you and your employees more choices, a bigger risk pool, and greater bargaining power.
2. Am I required by law to participate in SHOP?
No, participation in a SHOP is voluntary for small employers. But starting in 2014, you’ll have to purchase your employer-provided health coverage through a SHOP to qualify for the small business healthcare tax credit.
3. How do I know if my business qualifies for the SHOP exchanges?
As it stands now, “qualified employers” with less than 50 full time equivalent employees can purchase insurance for their employees through the SHOP exchange, but beginning in 2016, qualified employers with up to 100 employees can purchase insurance through SHOP. According to the Department of Health and Human Services (HHS), a “qualified employer” is defined as one that:
- is a small employer
- elects to offer, at a minimum, all full-time employees coverage in a QHP through a SHOP; and
- either has its primary office in the Exchange service area and offers all employees coverage through that SHOP, or offers coverage to each eligible employee through the SHOP servicing the employee's primary workplace.
A “qualified employee” is anyone who has been offered health insurance coverage by their qualified employer through the SHOP exchange.
4. What plan choices will small employers and their employees have?
Due to several delayed mandates, there’s a misconception that SHOP has been delayed in full. But that’s not true. Small employers can use the SHOP exchange for 2014, but they’ll have to choose a single plan option within a metal level (bronze, silver, gold, or platinum), and employees won’t have a choice of plans. This lack of choice could make the SHOP exchanges less attractive to small employers this year, but more insurance options will be available beginning in 2015.
5. Will I get the Small Business Tax Credit if I only offer my employees one option?
With updated rules from HHS, employers who prefer to offer their employees a single Qualified Health Plan can now participate in a federally run SHOP and still be eligible for the tax credit. And starting in 2014, you can only get the tax credit if you purchase your plan through the SHOP exchange.
For more guidance on the SHOP exchanges, the Small Business Administration is offering weekly webinars for small business owners to learn the basics of the Affordable Care Act and SHOP. Visit SBA.gov/healthcare for details, or call 800-706-7893 toll-free for questions on SHOP.
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