The Center for Medicare and Medicaid Services (CMS) announced proposed changes to the SHOP program, which is intended to give small businesses greater flexibility in purchasing healthcare for employees.
One of the ACA’s innovations for connecting small businesses with insurance was introducing a new tax credit and improved marketplace to the Small Business Health Options Program (“SHOP”). The SHOP created an online marketplace for employers with 50 or fewer full-time equivalent workers to select and purchase group health insurance. Eligible employers were also able to use the Small Business Health Care Tax Credit, which provides assistance for qualifying employers with 25 or fewer full-time equivalent workers to cover as much as 50% of the cost of premiums. The goal was for as many as 4 million people to gain coverage through the SHOP’s combination of efficient access (or “accessible”) to insurance and cost-reducing tax credits and subsidies.
Unfortunately, SHOP participation, which requires employers to purchase the plans through the online portal, after first verifying SHOP eligibility on the website, has not met expectations. CMS estimates enrollment has been disappointing at approximately 230,000 individuals, or about 5% of the initial goal. Enrollment has lagged as the offered plans and pricing have not presented an advantage over the traditional group market.
The proposed change would take effect on January 1, 2018. CMS will need to issue an official proposed rule – at this point, it has only announced the intention to do so – after which time a comment period and consideration of those comments, along with any revisions, will need to happen before the issuance of a final rule. These steps may be completed before the stated goal of January 1, 2018, but there is always the possibility for additional delays. Additionally, the text of the ACA requires the establishment of a government-administered SHOP marketplace, and it remains to be seen if the proposed structure, where the government makes the eligibility determination but does not provide for plan selection or purchase, would meet that requirement.
With the proposed changes, small businesses would still need to validate eligibility on the SHOP website and be able to assess cost-savings available through the SHOP platform. However, upon doing so, qualifying businesses would be free to pursue and obtain SHOP plans directly via a carrier or broker, rather than being restricted to the online marketplace at www.healthcare.gov. Employers who used the marketplace in 2017 would still be able to use it for premium payments and enrollments until the end of the current plan year.
Connecting small businesses to affordable health coverage is a complex challenge. This step from CMS, if implemented, will remove a major and unnecessary barrier to accessing the existing tax credits that help make these plans affordable. Partnering with an experienced broker at Zenefits to take advantage of these new options could mean the difference between offering insurance and not offering insurance for your small business. Small businesses offering health plan options to their employees is a critical aspect of attracting and retaining talent. With this proposed development in expanding the access to tax credits for small businesses, the opportunity to offer employees the option they covet could go a long way to helping small businesses compete for the best talent.
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