Last week we learned that the Department of Health and Human Services (HHS) has delayed by one year the launch of the online SHOP (Small Business Health Options Program).
What is SHOP?
SHOP is the federal online health insurance marketplace through which small business owners (employing less than 50 FTEs) can shop group health insurance plans for their employees.
The idea behind SHOP is much the same as that of the individual online marketplace. On SHOP, owners of small businesses will compare and purchase exchange plans in a one-stop, online shop.
Note: SHOP will be used only by those states not running their own exchange (including Virginia).
New Date for SHOP Launch
SHOP is now scheduled to launch a year from now, in November of 2014.
Some Small Business Owners (< 25 Employees) May be Eligible for Tax Credit on Exchange Plans
According to the provisions of the Affordable Care Act, small businesses (less than 50 FTE) are not required to provide health insurance for their employees. However, certain small companies may be eligible for a tax credit if they meet the following requirements:
- Company has fewer than 25 full-time equivalent employees, and
- Company pays an average wage of less than $50,000 a year, and
- Company pays at least half of employee health insurance premiums.
Starting in 2014, in order to get the tax credit, eligible small businesses must purchase their employee health plan through SHOP.
We should point out that most of our small group clients do not meet the three requirements above and therefore are not eligible for tax credits. So the delayed opening of SHOP will not have much impact.
What Should Small Business Owners Do?
For all small business owners — whether or not you are eligible for a tax credit — we actually look at SHOP’s delay as a blessing in disguise. If you have ever been responsible for choosing a group plan, then you know it is neither easy nor straightforward. Rather, it is complex and confusing. Although sending small business owners to an online site to compare and select a plan on their own may sound like a good idea, in practice, it may prove to be more complicated than it sounds.
In light of SHOP’s delay, HHS is encouraging small business owners to go directly to their agent or broker to purchase small group plans — both marketplace-certified and not marketplace-certified.
We could not agree more with a statement made by Janet Trautwein, CEO of National Association of Health Underwriters (NAHU), following HHS’s announcement:
“We are happy to see HHS and the administration actively encourage small business owners to utilize agents and brokers. The assistance of agents and brokers makes it possible for any small business to offer affordable, high-quality coverage to employees.
By going through an agent, small business owners have the advantage of the experience and advocacy of a professionally licensed health insurance advisor. Not only are agents able to help small business owners find a plan that fits the healthcare needs of their employees and the financial needs of their business, but agents also offer a litany of consumer protections to their clients. Agents are required to complete continuing education courses through their state department of insurance in order to keep their license, and they go through additional certification training to be able to sell exchange policies. Long after a policy is sold, agents continue to administer plans by working directly with carriers to resolve any billing and coverage issues that might arise. They also have professional liability insurance, have been proven to decrease insurance fraud, and improve claims processing efficiency and coverage stability.”
Give our office a call to learn more about group insurance for your small company.
For the time being, for those groups who may be eligible for the tax credit, we can help you fill out a paper application for SHOP eligibility and then send it in to the SHOP Marketplace. If you select a SHOP plan and then find out you are not eligible for the credit, you can still keep the plan you selected.
Please be patient as we manage a high volume of calls and emails.