On November 15, a new online exchange for the Small Business Health Options Program (SHOP) will go live on HealthCare.gov. The new portal (at www.healthcare.gov/small-businesses/) will allow small businesses owners to compare and enroll in health insurance plans online. Prior to the launch of the new portal, enrollment was only available through an insurance broker as part of the Affordable Care Act.
On Wednesday, October 15, Business Forward will host a conference call at 11:30 a.m. ET with Rhett Buttle, the Director of Private Sector Engagement at the Department of Health and Human Services. Register here for the call.
In the meantime, here are the answers to some frequently asked questions about SHOP.
What is SHOP?
SHOP, the Small Business Health Options Program, is a small-group health insurance exchange that provides a marketplace for small businesses with less than 50 employees. Plans are classified into four levels of coverage–Bronze, Silver, Gold, and Platinum–with corresponding deductibles, copayments, and limits for out-of-pocket costs. Business owners can also cover themselves with the same health insurance they offer employees.
Businesses are able to offer multiple plans in 14 states: AR, FL, GA, IN, IA, MO, NE, ND, OH, TN, TX, VA, WI, and WY. Employees can then use the SHOP exchange to choose between the different plans offered by the employer.
Can SHOP help small businesses spend less on their health insurance?
One study from the University of Chicago found that the health insurance offered on the SHOP marketplaces is approximately 7 percent cheaper on average than equivalent plans from outside the exchange. For the median health care plan, the difference could amount to $220 in annual savings. In addition, tax credits (see below) are available for some smaller businesses, which may further reduce the cost.
What businesses qualify to enroll in the SHOP exchange?
Any business with 50 or fewer full-time equivalent (FTE) employees is able to enroll. That metric includes all employees working more than 30 hours a week (full-time), and as well as the number of “equivalent full-time workers” represented by the total hours worked by part-time employees. Businesses with more than 50 FTE employees cannot use SHOP currently, but by January 1, 2016, all SHOP exchanges will be open to businesses with 100 or fewer FTE employees.
You can use this calculator to find out if you qualify.
Businesses with more than 50 FTEs may be required to provide insurance in 2015 or 2016, depending on their size. Healthcare.gov has more information.
Do I need to offer insurance to all of my employees to participate in SHOP?
Businesses must offer insurance to all employees that work 30 or more hours a week to participate in the SHOP exchange. Additionally, in most states more than 70 percent of employees must then enroll in the business’s health insurance plan (this does not include employees who already have coverage from another employer or the federal government.) The 70-percent requirement is waived during a special enrollment period from November 15 through December 15.
Which states are using the federal SHOP exchange?
Thirty-one states have SHOP exchanges run by the federal government. Business owners in states that are running their own exchanges will be directed to the appropriate portal from Healthcare.gov.
Do businesses have to enroll in November?
No, unlike the individual exchange, small businesses can enroll in a plan at any time. Coverage for businesses that enroll by the 15th of the month will begin the following month. Businesses can currently enroll through an insurance broker with a paper application, until the website is launched.
However, businesses that want to avoid the 70 percent employee take-up requirement must enroll in the SHOP exchanges in the November 15 to December 15 enrollment period.
Can my business continue to use brokers to buy coverage after the new portal is launched?
Yes. Businesses may use a broker to help them purchase insurance on the exchange, so long as the broker has registered with the SHOP marketplace. Brokers may be able to offer additional guidance about what insurance would best fit the business’s needs.
Do businesses have to use the SHOP exchange to qualify for small business tax credits?
Yes. Businesses with 25 FTE employees or fewer, with average wages less than $50,000, can qualify for tax credits up to 50 percent of the business’s share of health insurance premiums. Smaller firms with lower wages receive greater benefits. To get the tax credit, businesses must purchase health insurance through the exchange. The tax credit is non-refundable (except for non-profits) but can be applied to the prior year’s income taxes or any income taxes in the following 20 years.