The State of SHOP
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The Small Business Health Options Program (SHOP) was meant to encourage small businesses to offer health insurance to their employees; however, implementation of its employee option has been delayed in 18 states, and in general, business sign-ups for the program in other states have been slow. That said, the next two years should bring improvements to the program and allow more businesses to leverage its benefits.

The SHOP marketplace, a component of the Affordable Care Act, aims to make it easier for small business owners to provide health coverage for their employees. It was intended to launch with the federally-operated Health Insurance Marketplace at healthcare.gov, but encountered delays.

“The deployment of SHOP Exchanges that began on October 1, 2013 has had some hiccups. While a SHOP does exist in each state, the online eligibility determinations and enrollment functions are sparse, and in some cases, non-existent. For federally administered SHOPs, the U.S. Department of Health and Human Services delayed online enrollment. However, the department established a direct enrollment process through insurance agents or insurance companies that offer qualified health plans through the SHOP,” says John Eisele, vice president of business development at The DDC Group, a leading worldwide network of business process outsourcing experts and solutions, and the company’s resident health insurance expert.

SHOP is open to employers who have 50 or fewer full-time equivalent (FTE) employees and meet certain other criteria. Benefits include flexibility and tax incentives for qualifying businesses. Employers may choose how much they pay towards employee premiums and apply for coverage anytime.

The SBTC is available for businesses that have fewer than 25 FTE employees and have an average employee salary of about $50,000 per year or less.  A business must also pay at least 50% of the full-time employees’ premium costs and offer coverage to full-time employees through the SHOP.

A slow start for SHOP

The employee choice option in the Federally Facilitated SHOP (FF-SHOP) allows employees to choose from multiple plans. Implementation of the option has been delayed in 18 states. Employers in these states can still leverage the program, but they may have to choose one plan for all employees rather than give employees the option of choosing from multiple plans. Employee choice is an obvious benefit, as employees can choose the plan that best fits their family’s needs. “The decision for delaying the employee choice was left to the different state insurance commissioners who determined whether they felt it was in the consumer’s best interest,” explains Carol Taylor, an employee benefit advisor with the D&S Agency, a United Benefits Advisors Partner Firm based in Roanoke, Virginia.

So far, overall enrollment in the Health Insurance Marketplace has been slower than anticipated. The government is still working to get portions of the SHOP section of healthcare.gov up and running.  Participation will likely increase as employee choice is more widely available, and as improvements are made to the enrollment process, which is more cumbersome than originally hoped. 2015 will be the first year that businesses with more than 100 employees are penalized for not offering medical coverage to their workers. That mandate is slated to expand to businesses with more than 50 employees in 2016, which should also increase enrollment.

“Participation on the part of small business should increase once the employee option of the SHOP marketplace is implemented in all states and the monthly penalties for non-participation become effective; however, many businesses may initially elect to pay the penalties after doing the math on the costs to provide healthcare coverage versus penalties,” says Eisele.

If you’re considering offering healthcare to your employees for the first time, Taylor suggests seeking the advice of an experienced agent or broker who can help you make the best choice for your business.  You may also want to consult your tax advisor to take full advantage of any tax breaks that may be available.

To help determine if your business qualifies for SHOP, check out Healthcare.gov’s FTE Calculator.

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