Why SHOP?: Incentives of the Small Business Healthcare Options (SHOP) Program
SHOP eligible employers have a decision to make for January 1st, 2014: Should they offer their employee medical benefits through the exchange? To make this decision, they must understand the advantages and disadvantages of the marketplace in their state.
To participate in your states SHOP for January 1st, 2014, you must:
- Have a total of 50 or fewer full-time equivalent employees.
- Offer coverage to all full-time employees (30 hours or more, or in accordance to your state law).
- Have at least one “common-law” employee excluding business owners and spouses.
- Have a principal address in the state.
What’s MY Incentive?
Federally funded SHOP exchanges (IE: The marketplace in NJ) have different features than that offered by a state (IE: The NY SHOP marketplace).
- For either exchange, the biggest motivation is to receive the Small Business Health Care Tax Credit. If you are currently eligible, or will be eligible in 2014 and beyond, you must receive your employee benefits through the SHOP to receive the credit.
- State based SHOP exchanges have the ability to offer flexibility to employers by allowing them to either offer multiple qualified health plans (QHPs) to their employees or any plan within a given metal level of coverage. For 2014, federally funded exchanges do not offer the flexibility to offer various plans to their employees. In 2015, employers will be able to give their employees multiple options on federally facilitated SHOPs.
- While companies must meet SHOP eligibility requirements, they do not need to meet participation requirements for Special Enrollments of January 1st. You MUST enroll by December 15th to avoid the normal participation requirement threshold of 70%.
- Employers have the ability to offer both medical, and some other ancillary benefits through the SHOP exchanges for their employees to enroll in. Employees will enroll online, which may reduce some of the administrative burdens currently falling on the employer.
What About Going Direct?
Any plan being offered on the SHOP exchange will be offered off the exchange. Some carriers are offering additional plans, or plan options, off the exchange, in addition to their “on exchange” options. Therefore it would be best to evaluate plans both on and off the exchange for 2014, and evaluate the pros and cons of each option.