Health Care Reform Update: Online Enrollment for SHOP Unavailable for 2014
The establishment of health care exchanges (also known as marketplaces) is a critical piece of the Patient Protection and Affordable Care Act’s (ACA) purpose to make affordable health care coverage available for individuals and small businesses. Beginning on October 1, 2013, small businesses (generally, those with 50 or fewer full-time employees) are able to purchase health care coverage for 2014 through a government-run insurance marketplace established specifically for them—the Small Business Health Options Program (SHOP). However, what most small businesses will not be able to do for 2014 is offer their employees a choice of health plans through SHOP, as originally required.
Citing operational challenges, President Obama’s administration delayed for a year the requirement that SHOP exchanges provide small businesses with a choice of health plans for employees. Therefore, for 2014, the majority of SHOP exchanges will offer only one plan choice for small businesses and their employees.
In addition, online enrollment for federally-facilitated SHOP marketplaces is unavailable for 2014 plan years. Small business owners must instead use a direct enrollment process by contacting an agent, broker, or an insurance company that offers a SHOP marketplace plan to apply, shop and enroll for 2014. For detailed information on the enrollment process for 2014, consult the Centers for Medicare and Medicaid Services (CMS) guidance.
The ABCs of SHOPs
To help level the playing field for small businesses regarding access to affordable health care insurance, the ACA dictated the establishment of a group market health insurance marketplace for small businesses, SHOP. The SHOP marketplace, according to the government’s health care website, simplifies the process of buying health insurance for small businesses and gives them “choice and control over health costs.”
The way that the program works is that SHOP exchanges, like the individual health insurance exchanges, make insurance available through a state-created and -run marketplace or through the federally-run marketplace, or a combination of the two. The SHOP exchanges opened on October 1, 2013, for enrollment in health care plans for 2014.
Currently, 17 states and the District of Columbia are running their own SHOP marketplaces, with the majority of states having marketplaces run by the federal government.
Originally, SHOPs were required to provide employers with the possibility of offering employees a choice of health plans at a single level of coverage selected by the employer—bronze, silver, gold or platinum—for 2014.
However, based on “serious concerns that issuers would not be operationally ready to offer qualified health plans through the SHOP” if employee choice was implemented for 2014, the Department of Health and Human Services (HHS) implemented a transitional policy effective July 1, 2013. For plan years beginning on or after January 1, 2014 and before January 1, 2015, a SHOP is not required to permit employers to offer their qualified employees a choice of health plans at a single level of coverage, but has the option of doing so. The transitional policy states that federally facilitated SHOPs will not exercise this option, but will instead allow employers to choose a single qualified health plan from the choices available in federally-facilitated SHOPs to offer their qualified employees.
States running their own SHOPs have the option of offering employees a choice of health plans for 2014. Therefore, if you operate your business in one of the states that administers its own marketplace, you may be able to offer your employees a choice of health plans for 2014:
|States With State-Run Marketplaces |
|California ||Kentucky ||New York |
|Colorado ||Maryland ||Oregon |
|Connecticut ||Massachusetts ||Rhode Island |
|District of Columbia ||Michigan ||Utah |
|Hawaii ||Nevada ||Vermont |
|Idaho ||New Mexico ||Washington |
As the reasoning behind the delay, the HHS declared that “this transitional policy is intended to provide additional time to prepare for an employee choice model and to increase the stability of the small group market while providing small groups with the benefits of SHOP in 2014 (such as a choice among competing qualified health plans and access for qualifying small employers to the small business health care tax credit).”
If you qualify for the small business health care tax credit worth up to 50 percent of your premium costs, be aware that beginning in 2014, the credit is available only for plans purchased through SHOP.
Does Your Business Qualify for SHOP?
The SHOP alternative may be a good fit for your small business, particularly if you do business in a state with its own marketplace which offers an employee choice option beginning in 2014, and/or if you want to take advantage of the small business health care tax credit. There are a few requirements your business must meet to qualify for the SHOP marketplace:
- For 2014, employers must have 50 or fewer full-time employees (or full-time equivalents), although states running their own SHOP exchanges can allow employers with up to 100 full-time employees to participate. (All SHOPs should be open to employers with 100 or fewer full-time employees in 2016.)
- You must offer health care coverage to all of your full-time employees in order to use SHOP. (Full-time employees for this purpose are generally defined as those working 30 or more hours per week on average.)
- In many states, a minimum of 70 percent of your full-time employees must enroll in your SHOP plan.