SHOP (The Small Business Health Options Program) is a 2014 option for employers with 50 or fewer full-time and full-time equivalent employees (FTEs). In order to use SHOP, employers must offer coverage to all FTEs (defined as those working 30 or more hours per week on average). Some states require participation of at least 70% of the eligible population. In many states, employers can only enroll in SHOP by working with a broker or agent or directly through the insurance carrier, but online access is supposed to be available by November 2014. Employers with fewer than 25 FTEs may qualify for tax credits when buying coverage through SHOP, but only if they pay at least 50% of premium costs.
One of the original selling points for SHOP coverage is that it enables small employers to offer their employees not just one medical plan, as is most common now, but a choice of medical plan options just like large employers. However, in 2014 employers in most states are limited to offering one SHOP plan to employees. Some states may add choice as an option in 2015, but they can also apply for a delay in making choice available until 2016. While everyone can probably agree that choice makes SHOP more attractive to small employers, the states are concerned this will prompt insurers to raise exchange rates for 2015.
To date, not much has been reported on SHOP enrollment, but it is estimated to be low -- California signed up approximately 1.6 million individuals for expanded Medicaid and exchange coverage, but only 6,000 (about 1,200 small businesses) in their SHOP program. Maybe that's not so surprising -- Mercer data suggests that employer plan sponsors with fewer than 50 employees are more likely to be thinking about dropping coverage than adding it (in our 2013 survey, 34% said it was likely they would terminate their plan within the next five years, up from 23% the prior year). Given that employers eligible for SHOP are not required to offer coverage and that the majority of employers of that size haven't offered coverage in the past, it may take a very attractive benefit offering to entice them to use the program -- especially now that their employees have access to public health exchanges. On the other hand, they might just be waiting to see how things go in the first year.
Go to full article: washingtonpost.com