The State of the Small Business Health Options Program (SHOP)

The State of the Small Business Health Options Program (SHOP)
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Here’s what you need to know about the newest changes to the Small Business Health Options Program (SHOP).

The Small Business Health Options Program (SHOP), a component of the Affordable Care Act, was meant to encourage small businesses to offer health insurance to their employees. However, business sign-ups for the program in most states were slow, and as a result the system was decentralized from healthcare.gov starting in 2018.

SHOP is open to employers who have between 1 and 50 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 toward employee premiums and apply for coverage anytime.

A Slow Start

The deployment of SHOP exchanges that began on October 1, 2013, had some hiccups. While a SHOP does exist in each state, the online eligibility determinations and enrollment functions are sparse, and in some cases, nonexistent.

When the SHOP exchanges launched in 2013, only Vermont, which required all small group plans be sold through SHOP, reached a high volume of enrollments. In that state in June 2014, halfway through the first year of coverage, there were 33,696 enrollments. Compare that with enrollments in more populous states: 10,023 enrollments in New York and 9,563 in California. In Mississippi, there was a single enrollment.

What’s New with SHOP?

In 2017, only 27,000 employers total enrolled in SHOP.

With demand so much lower than anticipated, changes to the system were needed. On January 1, 2018, the actual purchasing of insurance moved off of the centralized healthcare.gov site.

Now, SHOP plans are available to purchase directly through insurance companies or via registered agents or brokers. But, you may still need to use healthcare.gov to review information about the insurance programs. For instance, the site has a feature to help you find agents and brokers in your area who are SHOP registered.

You also need to confirm your eligibility, which is done through a webform on the Centers for Medicare & Medicaid Services site. The process only takes a few minutes, and the decision is instant. This eligibility decision allows you to enroll and is necessary if you want to qualify for tax credits.

For small business owners with fewer than 25 FTE employees, SHOP plans may help you qualify for a Small Business Health Care Tax Credit. The credit may be worth up to 50 percent of your premium costs.

There are a few restrictions, such as your average employee salary must be below a certain amount, and you must offer SHOP coverage to all your full-time employees.

If you’re considering offering health care to your employees for the first time, it’s a good idea to consult your tax advisor to take full advantage of any tax breaks that may be available.

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