Small Businesses can SHOP for Health Coverage Starting in 2014

May 20, 2014

When I take my Affordable Care Act show on the road, usually my audience consists of human resources and benefits professionals who are looking for information they can take back to their workplace and the business owners. Last week I had the opportunity to meet with business owners directly when I gave a presentation on ACA to members of the Main Street Wausau business community. Almost all of the businesses represented have less than 50 full-time equivalent employees (FTEs), so they weren’t there to listen to me ramble on about the pay or play mandate in 2014.

What they did want to hear about (or maybe what I decided to talk about!) was what the marketplace for health coverage would look like in 2014 for a small business. Thankfully, I was able to talk about opportunities in 2014, rather than just obligations. The opportunities come from ACA’s creation of the Small Business Health Options Program (or SHOP). For Wisconsin employers, SHOP will be part of the federally facilitated insurance exchange which will be up and running in 2014. Small employers (less than 100 FTEs) looking for health coverage for their employees can go to SHOP and do just that, shop. Employers can shop for a tier of coverage (from basic tier bronze to highest tier platinum) from which their full-time employees will be able to pick qualified health plans. Employees can then shop among the various qualified health plans offered within the tier selected by the employer.

Unlike the current marketplace, the SHOP part of the exchange will allow small employers to bring to the health insurance market their full-time employees, but with more choices for those employees (a selection of many qualified health plans within the coverage tier), and without the sting of premiums being determined by the health status of only the employer’s small group. Instead, premiums will be determined on a modified community-wide basis.

Small employers are not required to contribute towards coverage through the SHOP, but they can do so if they desire. One nice feature of the SHOP (starting in 2015) is that the SHOP will aggregate all of the premiums required for the coverages selected by the employees, and then send one statement to the employer. The SHOP will also determine whether the employees are entitled to premium subsidies and offset those subsidies before sending the statement to the employer. So, even if your employees select coverage under different qualified group health plans and/or have premium credits coming from ACA, the SHOP will handle the financial accounting and send just one statement to the employer.

As is often the case, the first year of the SHOP implementation (2014) means a slightly slimmed down version of the full program. For example, employers do not have to make available all qualified health plans within a coverage tier to their employees, instead they can select just one qualified health plan for 2014. Also, the premium aggregation feature (the SHOP aggregates all premiums due and sends the employer one statement) will not be offered until 2015.

I can see the SHOP providing more opportunities to smaller employers including non-profits to actually offer group health plan coverage, without the small size of the employer s workforce having such a big impact on the premiums.

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Mary Ellen Schill

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