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Small Business Employee Benefits and HR Blog

Small Business SHOP Marketplace FAQs for 2014

The Affordable Care Act (ACA) created the Small Business Health Options Program (SHOP) for small employers. Each state has a SHOP Marketplace, offering a new way for small employers to purchase a group health plan.

SHOP_FAQs

As the SHOP Marketplaces have been rolling out this year, there have been a few delays and changes.

What is the SHOP? Is the SHOP up and running? Are small employers using the SHOP?

These new FAQs answer common questions on the SHOP Marketplace for 2014.

What is the SHOP Marketplace?

As part of the ACA, small employers have the option to purchase a small group plan through their state's SHOP Marketplace. 

The SHOP is a required program of each state's Health Insurance Marketplace.

Small employers with fewer than 50 employees are eligible to purchase a plan via the SHOP. 

Starting in 2016, all SHOP Marketplaces will be open to employers with up to 100 FTEs.

I've heard there have been delays with the SHOP... What's the current status?

Currently, eligible small employers can purchase a health plan through the SHOP Marketplace through their licensed health insurance agent or broker, or directly through an insurance carrier. Small employers are not yet able to purchase a plan by themselves via the online Marketplace. It's expected that by late 2014 or early 2015, the online Marketplace will be fully up and running.

Are the Small Business Health Care Tax Credits only available through the SHOP?

Yes. A key change is that the small business health care tax credits are only available through the SHOP marketplace in 2014 (unless there are no SHOP plans available in the region).

Small employers with 25 or fewer employees who receive, on average, less than $50,000 a year in wages may be eligible for tax credits if they purchase the plan through the SHOP Marketplace.

These credits will cover up to 50% of the employer’s cost (up to 35% for non-profits) for the first two years of coverage, depending on size and wages.

What are the plan coverage options through the SHOP?

In 2014, most SHOP Marketplaces are allowing employers to only offer employees a single plan. However, in some of the state-run Marketplaces, plan coverage selection will fall into one of three categories:

  1. "Employer choice": Employer selects one or more plans for employees.

  2. "Hybrid choice": Employer selects a metallic level, and employee selects a plan from within that level.

  3. "Employee choice": Employee can choose any SHOP plan that meets the benefit plan requirements.

Starting in 2015, each state SHOP will be required to offer the "employee choice" option. To see if the "employee choice" is being offered in your state see: 15 States to Offer 'Employee Choice' in Small Business SHOP Marketplace.

Are small employers using the SHOP?

Now that 2014 is here, many small employers are passing up the SHOP Marketplaces, and opting to send employees to the individual exchanges or keeping their current coverage.

Although the SHOP Marketplace may seem attractive on the surface, it is still a group health plan and it doesn't address the core problem that for most small employers group health insurance is broken.

Small employers hoped the SHOP Marketplace would help them offer affordable health benefits, but instead:

  • Competition is low in the SHOP Marketplaces (i.e. in most states there is still little choice for employees, and little competition to drive costs down).

  • Premiums cost more in the SHOP Marketplaces than in the individual market (i.e. the premiums are still cost prohibitive for most small businesses).

  • Premium subsidies are only available in the individual exchanges (i.e. providing further cost incentive to send employees to the individual market). Many small employers are not eligible for the small business health care tax credits, and if they are, the discounts are not as signifcant as on the individual market.

Read more about why small employers are passing up the SHOP for individual exchanges and defined contribution.

Do you have more questions about the SHOP Marketplace?

Leave a comment below, or check out these detailed FAQs via HealthCare.gov.

The Comprehensive Guide to the Small Business HRA 

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