Navigating the Small Business Health Options Program Marketplaces
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Small companies have another option for providing workers with health insurance: the Small Business Health Options Program (SHOP) Marketplace. Marketplaces, which are run by individual states or the federal government, were created through the Affordable Care Act (ACA).
For 2014, most businesses with fewer than 50 full-time employees or the equivalent (as defined by the ACA’s play-or-pay provision) can take advantage of the SHOP Marketplaces with limited application until 2015. By Jan. 1, 2016, the Marketplaces will be available to most employers with fewer than 100 full-time employees or the equivalent.
While the Marketplaces will offer eligible employers another choice, employers need to understand how the Marketplaces work in each state. The Marketplaces offer four levels of plans, but it’s important to note that plans in each level offer similar benefits and quality of care. For instance, all offer “essential health benefits,” such as emergency services, maternity and newborn care, and prescription drugs.
The differences between the plans lie in the ways in which employees share in the costs of their health insurance. This includes the monthly premiums, and costs such as deductibles and copayments. The levels are:
Platinum: Plans cover 90% of the total average costs of care. They typically will have the highest monthly premiums, but lower out-of-pocket costs for each service.
Gold: Plans cover 80% of the total average costs of care.
Silver: Plans cover 70% of the total average costs of care.
Bronze: Plans cover 60% of total average costs of care.
Be sure to review all costs before deciding on a plan to offer, as the plan with the lowest premium may not provide the best value. For instance, employees on a bronze plan may pay a lower monthly premium, but also pay more each time they visit a doctor. In general, plans with lower premiums have higher out-of-pocket costs and vice versa.
In addition, employers who aren’t happy with their plans will have to wait until the annual enrollment period to choose new offerings. (They can still add or remove eligible employees and dependents throughout the year.)
In some states, companies can offer just one health plan, and possibly a dental plan, while in other states an employer can offer multiple plans. Dental plans generally cover between 70% and 85% of the total average cost of care. Employers who aren’t satisfied with a Marketplace’s offerings may still want to keep tabs on it, as each state’s offerings may change in 2015.
In addition to the employee limit, employers must meet other criteria to use a SHOP Marketplace. For instance:
- The company must have a business address or employee work site within a particular SHOP’s service area.
- The business must offer coverage to all full-time employees. Employees generally are considered full-time if they work at least 30 hours per week.
- In some states, at least 70% of eligible employees must enroll in the program. However, this figure can exclude those who have coverage elsewhere, either through another job or person, or a program such as Medicare or the U.S. Department of Veterans Affairs. Employers who apply for SHOP coverage between November 15 and December 15 each year may be able to enroll without meeting this requirement.
- Eligible companies must have at least one common-law employee, other than the owner or spouse, on their payrolls. (Self-employed individuals can look for coverage in the individual marketplaces.)
In addition, employers must work with an insurance agent, broker or company to determine their eligibility for a SHOP Marketplace and to compare available SHOP plans. Most agents or brokers will have a National Producer Number (NPN). They also must agree to safeguard the privacy and security of the personal information provided by employees during the application process. Of course, employers can browse the plans and estimate costs on their own at https://www.healthcare.gov.
Employers can begin SHOP plan coverage at any time; enrolling by the 15th of the month typically means they’ll have coverage beginning the first of the following month. Be aware that employers are responsible for letting their employees know about SHOP coverage and providing information on enrolling.
Tax Credits Available
Employers with fewer than 25 full-time equivalent employees (as defined under the ACA’s provision for the credit) who purchase insurance through a SHOP Marketplace may qualify for a tax credit.
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