Beginning with the 2014 plan year, individuals and small employers will be able to purchase health insurance through online competitive marketplaces, or Exchanges. Each state’s Exchange includes a Small Business Health Options Program (SHOP) component that small employers can use to provide health insurance options for their employees.
The Department of Health and Human Services (HHS) is operating a federally-facilitated Exchange (FFE or FF-SHOP) in each state that does not establish its own Exchange.
On Nov. 27, 2013, HHS announced that online enrollment in the FF-SHOP Exchanges would not be available until November 2014. Employers that wish to enroll their employees in SHOP coverage for 2014 will do so through “direct enrollment” with an agent, broker or insurer offering a certified SHOP plan.
The direct enrollment process applies in states with FF-SHOPs only. States that operate their own SHOP Exchanges will still be permitted to offer online enrollment.
HHS also released a set of Frequently Asked Questions (FAQs) on how the FF-SHOP Exchange would function until November 2014.
Overview of SHOP Enrollment
Small employers with up to 50 employees will be eligible to participate in the SHOP Exchanges. In 2016, the maximum number of employees will increase to 100. Beginning in 2017, states may allow businesses with more than 100 employees to participate.
Unlike the individual Exchange enrollment process, small employers can enroll through the SHOP on a monthly basis throughout the year. As such, some states are phasing in SHOP application and enrollment periods.
Originally, employers and employees were required to enroll by Dec. 15, 2013, for coverage to begin on Jan. 1, 2014. In the FF-SHOP, HHS has said that it intends to extend this enrollment deadline to Dec. 23, 2013.
Delay for Online Enrollment in FF-SHOPs
The FF-SHOP opened on Oct. 1, 2013, when small employers could start the application process and get an overview of available plans and premiums in their area. However, online enrollment in the FF-SHOPs will not be available until November 2014.
For 2014, small employers will have to enroll their employees in coverage through a process called “direct enrollment,” similar to how most small employers get insurance today. Through this process, small employers will enroll in qualified health plan (QHP) coverage through an agent or broker, or directly with an insurer.
When using direct enrollment, small employers will fill out a paper application to enroll in coverage through the FF-SHOP. An agent, broker or insurer can help an employer fill out the paper application and send it in to the FF-SHOP. Alternatively, employers may fill out and mail in the application form themselves, or get help through the toll-free SHOP Employer Call Center at 1-800-706-7893.
Small employers will not need to apply for SHOP eligibility before enrolling, and will not be required to use the HealthCare.gov Web page. Although employers cannot purchase coverage online, they can go to HealthCare.gov to get information on plan options, including which insurance companies offer SHOP QHPs in their area.
This change to “direct enrollment” in states with an FF-SHOP Exchange won’t affect the process for getting SHOP coverage in states running their own SHOP Exchange.
Eligibility Determinations
The FF-SHOP will review each application and can determine later whether the small employer and its employees are eligible for SHOP coverage. The employer does not need to wait for the SHOP to determine eligibility, because it doesn’t affect the employer’s ability to enroll in a QHP. Even if the SHOP later determines that an employer is not eligible to enroll through the SHOP, the employer and its employees may remain enrolled in the plan.
In 2014, the purpose for the SHOP eligibility determination is to allow an employer to claim the expanded the Small Business Health Care Tax Credit, as long as the employer also meets all the other requirements for the tax credit. Beginning in 2014, the Small Business Tax Credit covers up to 50 percent of an eligible employer’s premium contributions. However, the tax credit will only be available for coverage purchased through a SHOP Exchange.
If an employer does not believe it will qualify for the tax credit, the employer does not need to apply for SHOP eligibility. Additionally, an employer does not need to apply for a tax credit eligibility determination immediately upon enrolling in coverage, as long as the determination is made before tax filing time.
Previous FF-SHOP Feature Delays
On March 27, 2012, HHS issued a final rule that describes the minimum functions of a SHOP. The final rule provides that a SHOP must allow employers the option to offer employees all QHPs at a level of coverage chosen by the employer—bronze, silver, gold or platinum. This is called the “employee choice model.” Under the employee choice model, the employer chooses a level of coverage and a contribution amount and employees then select any QHP at that level.
In March 2013, HHS announced that FF-SHOPs would not be offering the employee choice feature during 2014. Instead, for 2014 plan years, employers must choose a single QHP to offer their qualified employees. In state SHOPs, the employee choice feature is optional, but not required, for 2014 plan years. This transition policy is intended to provide all SHOPs with additional time to prepare for the employee choice model.
The 2012 final rule also included a premium aggregation function for the SHOP that is designed to assist employers whose employees are enrolled in multiple QHPs. Because this function will not be necessary in 2014 for SHOPs that delay implementation of the employee choice model, the final rule makes the premium aggregation function optional for state SHOPs for plan years beginning before Jan. 1, 2015. The FF-SHOP will perform the premium aggregation function only in plan years beginning on or after Jan. 1, 2015.
Quick Facts:
- On Nov. 27, 2013, HHS delayed online enrollment for FF-SHOPs until November 2014
- Small employers can enroll directly in SHOP coverage through agents, brokers or insurers
- State SHOPs can still offer online enrollment
- For SHOP coverage to begin on Jan. 1, 2014, HHS intends to extend the enrollment deadline to Dec. 23, 2013
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