What is the SHOP Marketplace?
SHOP is the Small Business Health Options Program-A marketplace that helps businesses provide health coverage to their employees. The SHOP Marketplace is open to employers with 50 or fewer full-time-equivalent (FTE) employees.
Employers control the coverage they offer and how much they pay toward their employees’ premiums. They can also choose from four levels of coverage to help find a plan that works best for both the employers and the employees’ needs. Tax credits worth up to 50% of your premium costs may also be available for those employers with fewer than 25 employees when coverage is purchased through SHOP and when average wages for employees do not exceed $50,000 for 2014.
To qualify for SHOP, employers must employ 50 or fewer FTE employees, and those employees must generally work 30 hours or more per week, on average. In most states, at least 70% of FTE employees must enroll in the SHOP plan, although this requirement can be avoided if employers apply for coverage between November 15th and December 15th each year. Each state has a SHOP Marketplace, and an employer must have an office/site within that SHOP’s service area in order to use that SHOP in particular.
What do small businesses need to know?
Employers with 50 or fewer FTE employees do not face penalties for failing to offer health coverage. However, businesses with 50 or more employees could face payments in 2015, under the Employer Shared Responsibility payment. This is a new requirement under the health care law for some employers. It will not take effect until 2015, and it will apply to employers with 50 or more FTE employees that don’t offer coverage or whose coverage does not meet certain minimum standards.
Insurance plans may not turn down employers based on the health status of employees or their dependents, even if they have pre-existing conditions. They also may not charge employers higher premiums for women, or increase the group’s premium for employees with high medical costs.
How do I choose coverage that’s right for my business?
Plans are broken into four categories: Bronze, Silver, Gold, and Platinum. These categories do not refer to the quality of care specific to each plan, but rather the way employees can expect to share healthcare costs with the plan.
All plans offered through the SHOP Marketplace provide a set of essential health benefits. All plans cover existing conditions and some free preventative services. The category of plan affects how much employees will pay for things like deductibles and copayments, and the total amount they spend out-of-pocket for the year, if they need a lot of care.
As previously mentioned, employers have control over how much to contribute toward their employees’ premium costs. When comparing plans, it is important to consider the premium cost vs. the amount employees have to pay out-of-pocket for covered services. The plan with the lowest premium may not provide employees with the best overall value. Balancing premiums and out-of-pocket costs is tricky. As a general rule: the lower the premium, the higher the out-of-pocket costs, and the higher the premium, the lower the out-of-pocket costs.
What about employers with 50 or more FTE employees?
In our August edition of Polk Checkup, we will discuss large employer requirements under the Affordable Care Act and Employer Shared Responsibility payment.
For questions regarding the Affordable Care Act, please feel free to contact Heidi Lund.