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Small Business Health Options Program: S.H.O.P.

Excerpt: Each state exchange operates a small business options program (SHOP) that assists qualified small businesses in purchasing health insurance. The SHOP (Small Business Health Options) enables small employers to offer their employees a choice of health plans similar to those offered by large employers. They give small businesses greater bargaining and cost advantages, a bigger risk pool, and choices among affordable health plans. In SHOPs, employers can choose the range of plans they want to offer and decide on a contribution toward the coverage. This allows employees to choose among plans and to select the one that best fits their needs and their budget ...

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"They give small businesses greater bargaining and cost advantages"

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What is the Small Business Health Options Program (SHOP)?
Each state exchange operates a small business options program (SHOP) that assists qualified small businesses in purchasing health insurance. The SHOP enables small employers to offer their employees a choice of health plans similar to those offered by large employers. They give small businesses greater bargaining and cost advantages, a bigger risk pool, and choices among affordable health plans. In SHOPs, employers can choose the range of plans they want to offer and decide on a contribution toward the coverage. This allows employees to choose among plans and to select the one that best fits their needs and their budget. Specifically, SHOPs can help small businesses by:

Provide side-by-side comparisons of qualified health plans (QHPs), their benefits, premiums, and quality through an exchange website

Answer specific and individual questions to help you and your employees' choose the best overage options

Enable your employees to choose a QHP from several insurers

You will be able to decide whether and when to participate in SHOP. You can choose your own level of contribution toward your employees' coverage, and make a single monthly payment through SHOP rather than to multiple plans. Your business will be ensured that all QHPs offered meet basic minimum Federal and State standards

SHOP can save your business money by spreading insurers' administrative costs
across more employers. In addition, your business may be eligible for small business tax credits when you offer health coverage for your employees through a SHOP


SHOPs can allow employers to select a single plan to offer their employees. Alternatively, employers are welcome to purchase coverage outside of an exchange. Beginning January 1, 2014, SHOP, or a merged SHOP and individual exchange, will be offered in each state.  


Is my business eligible for SHOP?
A qualified employer is a small employer that elects, at a minimum, to make all of its full-time employees eligible for one or more QHPs in the exchange’s small group market through a SHOP. The employer must offer coverage for all its employees through the SHOP in which the employer’s primary business address is located, or offer coverage to each eligible employee through the SHOP serving that employee’s primary worksite. While participating in SHOP, employer must comply with all applicable SHOP requirements, processes, and timelines. A qualified small employer does not lose its eligibility to participate in a SHOP if it increases its number of employees. They can continue to participate in the SHOP until they fail to be eligible or decide to no longer participate.
For purposes of participating in the SHOP, a small employer is one that employs either 1 to 50 or 1 to 100 employees, states can set the size of the small group market until 2016. Starting in 2016, small businesses with up to 100 employees can participate in a SHOP. By 2017, states have the option to permit businesses with over 100 employees to buy large group coverage.


Is my business eligible for a small business health insurance premium tax credit?
Presently, the Affordable Care Act (ACA) has established a small business tax credit to help make health insurance more affordable for qualifying small businesses purchasing coverage through SHOP. Starting in 2014, qualifying small businesses purchasing health coverage through SHOP are eligible for a tax credit of up to 50% of their premium payments if they have 25 or fewer employees, pay employees an average annual wage of less than $50,000, offer full time employees coverage, and pay at least 50% of the premium.
Non-profit employers meeting the eligibility criteria can receive credits for 25% of the employer’s share of premium costs through 2013 and 35% of these premium costs for two years starting in 2014.  


What sort of benefits will SHOP health plans offer?
All plans will cover essential health benefits like those covered by a typical employer health plan.  Benefits are offered in four “tiers” (bronze, silver, gold, platinum coverage levels) based on the amount of coverage provided.  Furthermore, SHOP will provide information in comparing different health plan benefits.


How are SHOP plan premiums set?
Under the ACA, premiums in many states will no longer be based on employees’ health or medical history. Instead, premiums can vary based only on the ages and smoking histories of employees. Some States may opt for even stronger consumer protections. Employees cannot be excluded from a plan or denied plan benefits because of a pre-existing health condition.  


Can a Health Insurance Broker assist with SHOP?
Yes.  Agents and Brokers are able to provide guidance, assistance and sell health plans offered in the SHOP.  Employers interested in participating in a SHOP must enroll in the program by creating an online account and completing an online application through the exchange website, all with the assistance of a broker.
To complete the application, the employer must provide:

Employer’s name, contact information, and address of each business location

Number of full-time employees

Information about health plan choice selected, including cost-sharing level it wishes to provide (bronze, silver, gold, platinum), a specific plan, length of any waiting period, 90 days max, and the percentage of the premium it will pay towards individual and family coverage in the selected plan

List of qualified employees and their social security numbers

Information to set up payments of the employer’s portion of the monthly premiums


After the employer has enrolled in the SHOP program, their employees must complete and submit an application similar to the standard streamlined exchange application. The employee will provide identifying information regarding each individual for whom he or she is applying for coverage through the SHOP program. As with the employer application, the employee can submit the application online, through mail, over the phone, or in person by visiting an agent, broker, or exchange navigator.


California Small Employer Health Option Program (SHOP)
On October 30, 2012, the California Health Benefit Exchange staff recommends on pursuing the “Employer Tier Choice, Employee Choice Issuer and Plan” option for launch in 2014. The recommended SHOP option permits employers to establish the metal tier for all their employees and allows them to select among available health plans. The employer can choose to offer plans at any one of the bronze, silver, gold, or platinum levels.

The Employer Tier Choice, Employee Choice Issuer and Plan option was elected for the following reasons:

It introduces a new offering not widely available in the current market. The unique product offerings in Employee Choice will enhance the Exchange's appeal and ability to compete with the commercial market.

Delivers the best balance of employee choice and affordability

Reflects policy that plans offered in the SHOP Exchange are expected to be offered at the same price for all small groups of 2-50 employees, and for all combinations of offerings.

It reflects independent actuarial counsel that this mix of offering would be likely to reflect the most affordable and least subject to adverse selection.

Helps initial launch to deliver a simple and friendly shopping and enrollment experience (communicating two or three choice options may be more complex to communicate to employers and employees).

It complies with the Affordable Care Act.

The Employer Tier Choice, Employee Choice Issuer and Plan ensures a common level of coverage for all employees of a given employer, and allows them to select a health plan that best meets provider and network coverage needs. In addition it enhances competition among plans and continuity of coverage for employees that switch jobs.

 

Useful blogs:

Health Care Tax Credit Update – IRS Outreach to Small Business

Q&A About Health Care Tax Credit

What Am I and Why do I Care? EE, Independent Worker? Contractor?

 

Sources:
PPC’s Guide to Health Care Reform
Fact Sheets on State Exchanges

Employee Choice in the Small Employer Health Options Program (SHOP)