Are We Finally Ready to SHOP

Are We Finally Ready to SHOP

Our Thinking / Healthcare /

Are We Finally Ready to SHOP
Calendar02 September 2014

This helpful update on the Small Business Health Options Program (SHOP) begins with a success story: a small business owner who went to the Colorado exchange and lowered her health costs significantly when her employees could choose the level of health coverage they needed. Then the story goes on to explain why her experience is the exception rather than the rule.

The ACA offers businesses with fewer than 50 employees the opportunity to purchase health insurance coverage for their workers through a SHOP, although they’re not required to offer coverage at all. There are 5.8 million firms of this size in the U.S., with at least 37 million employees. (Well over a third of them don’t provide health coverage, which helps explain why nearly half of the nation’s uninsured people are self-employed or work for a small company.) Further, businesses with fewer than 25 employees with average annual wages of less than $50,000 are eligible for a tax credit that can cover up to half the cost of an employer’s share of premiums. An estimated 4 million small businesses could qualify, but very few have taken advantage of the offer.

Why are small business owners hanging back? A bunch of reasons. First, only 15 states and the District of Columbia have launched small business exchanges, although three more will do so this year. The federal SHOP exchange was supposed to become available on the same day that went live, but the launch was postponed, causing confusion. And when the Obama administration decided to allow noncomplying plans to be renewed after complaints about cancellations, not as many businesses needed to look for new policies for their employees.

But this may be the year that SHOP becomes a viable option for small business owners. Three more states have firm plans to launch their own exchanges, and administration says the federal SHOP exchange will open this November – although it is somewhat concerning that they haven’t announced a firm date. If you’re a small business owner, it’s certainly worth talking with your broker about SHOP – or, if you’re as brave as the woman profiled in the article, going online yourself to investigate.

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