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Lost in the Shuffle: The SHOP Exchanges for Small Employers

Posted in Plan Administration, Welfare Plans

With all of the discussion about the individual mandate, the failings of the PPACA enrollment sites and the general inability of the government to make the enrollment process work smoothly, small employers may have overlooked their own enrollment option.  The Small Business Health Options Program (The SHOP Exchange or the SHOP Marketplace) or Small Business Health Options Program.  Staring October 1, 2013, small employers can use the SHOP Exchange to provide health insurance for their employees.

For 2014, employers with fewer than 50 FTEs can purchase coverage through the exchange and, after 1/1/2014, the small business tax credit will only be available for coverage purchased through the exchange.  So there is some incentive to look at it.  On the other hand, employers should be aware that the individual carriers offering the exchange may have required participation rates (like 70% if your population) and coverage purchase through SHOP must be offered to all employees who work 30 or more hours per week.  Plus, my favorite quote from the official SHOP website: “The SHOP exchange is as easy to access and use as the individual marketplace.”  So you have to access it like everyone else, which has been tough.

Small employers may have assumed that because they were under 50 FTEs, the discussion about the mandates and affordable coverage was not relevant to them.  However, things like the SHOP Exchange show that even small employer have to look at their coverage (or lack of coverage) and develop a compliance strategy.  Remember, a small employer offering coverage is treated like a large employer offering coverage in many ways.  There may not be the same penalties, but there are still some of the same responsibilities as it relates to what the plan does cover if you offer it and who can have it.  Beware of the distinction.