Are you a small business owner (employing less than 50 FTE)?
Do you offer health insurance to your employees?
Have you heard of SHOP — the Small Business Health Options Program — and is it right for your business?
Group Health Insurance
Although small business owners are not required by law to provide health insurance, doing so is a great way to attract and retain the best and brightest talent for your company. Providing coverage also promotes a healthy lifestyle that keeps your workers at work, doing the jobs that are critical to your organization’s success.
But choosing the right plan for your business can be overwhelming.
Small business owners have always had a lot to consider when it comes to offering health insurance to their employees:
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- Cost to you (the employer)
- Cost to your employees
- Details of the coverage including provider networks and prescription benefits
- Ease of working with the carrier you choose
- Whether or not to offer and contribute to a Flexible Spending Account (FSA) for your employees
- Whether or not and how much to contribute toward premiums for employees’ dependent coverage
- Etc.
SHOP – Small Business Health Options Program
Now that the Affordable Care Act is in place, small business owners have another thing to consider:
Should you purchase a group plan through SHOP — the Small Business Health Options Program — or outside of SHOP?
SHOP is the federal online health insurance marketplace for small businesses. Like the federal health insurance marketplace for individuals (healthcare.gov), SHOP was conceived as a one-stop shop where small business owners (less than 50 FTE) could shop online to compare and purchase exchange plans.
However, in reality, at this point SHOP does not offer a wide variety of plans to choose from. Instead, only a select few carriers offer plans on SHOP, meaning your options are limited.
(SHOP is for small employers in states which have not set up their own exchanges (including Virginia). Business owners in Maryland and DC can buy group plans through the state exchange.)
What Kinds of Businesses Should Use SHOP?
Given that SHOP offers only limited options for group plans, it may not be an ideal solution for many business owners.
However, there is a subset of small business owners for whom SHOP does make sense.
If you own a small business with:
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- Less than 25 employees, AND
- The average income of those employees is less than $50,000
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you may be eligible for a small business health care tax credit.
The tax credit is offered on a sliding scale, based on the size of your business. The smaller the business (either in FTEs or wages), the bigger the credit — and the more reason it may make sense to buy a plan on SHOP.
Conversely, the larger your business (the closer to 50 FTE you employ or the higher the average wages of your employees), the less benefit you stand to reap by shopping on SHOP.
Virginia Medical Plans Can Help
The bottom line is that if you own a small business, it’s best to fully understand all of your options before choosing a group plan.
At Virginia Medical Plans we have been helping small business owners in Virginia, Maryland, and the District of Columbia choose and administer their employee health insurance plan for over 20 years. We are available to help you at each step along the way — whether you enroll through SHOP or through the private marketplace.
Give us a call at 703-707-8270 to discuss your options for group plans, or submit this form to request a free quote today.
Resources for Small Business Owners
The federal government recently released helpful user guides for SHOP — one for employers and one for employees:
- SHOP Employer User Guide– gives step-by-step instructions for using SHOP to browse, choose, and purchase a group plan.
- SHOP Employee User Guide – gives step-by-step instructions for using SHOP to enroll in employer-sponsored group coverage.
