The Affordable Care Act (ACA) is raising many questions among Americans who may not fully understand what changes will be taking place. One of the primary developments we’ll see is the establishment of an affordable online insurance marketplace, officially known as the Small Business Health Options Program (SHOP). This marketplace is available to employers with fewer than 50 full-time equivalent employees.
What is Small Business Health Options Program (SHOP)?
SHOP was established to help employers compare the cost and benefits of a large number of health insurance plans, all in one convenient online location. Employers can investigate options on their own or with their agent or broker. The premiums remain the same regardless of whether or not you have assistance.
Each state will have a SHOP Marketplace, and your office or worksite must be within a SHOP’s service area if you want to use it. When you complete the online application, it will direct you to the appropriate SHOP. Once you choose an insurance plan, you determine what you will pay towards your employees’ premiums. From that point, your employees can enroll in the health plans.
What businesses qualify for SHOP?
From 2014 to 2016, employers with fewer than 50 full-time equivalent (FTE) employees are eligible for SHOP. From 2016, that number will be increased for employers with up to 100 full time equivalent employees. Self-employed workers, with no employees, can use the Health Insurance Marketplace, not SHOP. Employers using SHOP have to offer coverage to all full-time employees. Several states require that at least 70 percent of your full-time employees enroll.
How does SHOP work?
In theory, SHOP will make it easier for you to choose and purchase health insurance for your small business. You are able to select the amount of coverage and the cost of premiums you’ll pay. The online comparison guide helps clarify the pros and cons of each insurance plan, so you know exactly what you’re getting. Furthermore, some small businesses may even qualify for a special health care tax credit that’s worth up to half of your premium costs. From 2014, this credit will only be available for plans purchased through SHOP.
Do my employees have to use the coverage I offer?
No. Employees can purchase coverage through the general Health Insurance Marketplace instead. However, if you offer coverage that meets the minimum value and is considered affordable, employees will not qualify for savings on their monthly premiums through the general Marketplace.
What should I do to prepare?
Small business employers can start purchasing plans for 2014 from October 1st of this year. If you already offer insurance coverage, check with your insurance company to see if they’ll be offering plans through SHOP. If not, you may want to compare your existing coverage with SHOP options, particularly if you might be eligible for the tax credit.