A Direct New Path to SHOP Marketplace Coverage

Posted November 27, 2013

In 2014--a few short weeks away--the Affordable Care Act will take steps to remove key barriers that small employers have traditionally faced when offering health insurance to their employees.

Together, new insurance reforms and the Small Business Health Options Program, the SHOP, will help curb premium growth, and spur competition based on price and quality.

The Affordable Care Act does not require small employers with fewer than 50 full-time or full-time-equivalent employees to offer health coverage to their workers.  But the ACA does provide small employers with access to a SHOP Marketplace in every state, offering coverage through qualified health plans that may take effect as early as January 1, 2014.

The SHOP Marketplace helps small businesses compare different plans, to find a plan that fits their budget and meets the needs of their business and employees.  And, it will provide many small businesses access to an expanded Small Business Health Care Tax Credit, which in tax years beginning in 2014 will be worth up to 50 percent of employer-paid premium costs, to help them afford coverage for their employees and dependents.

Since it first became available in 2010, the Small Business Health Care Tax Credit has been worth up to 35 percent of employer-paid premium costs, and has provided more than $1 billion in tax credits. 

For tax years beginning in 2014, the credit will be available only for coverage purchased through the SHOP Marketplace.  

Employers can offer coverage through the SHOP Marketplace at any time during the year. If you want your employees’ coverage to begin on January 1, 2014, the current deadline is December 15.  In the Federally-facilitated SHOP, we intend to extend this enrollment deadline to December 23. 

How to offer your employees coverage through the Federally-facilitated SHOP Marketplace in 2014 

For small businesses in states with a SHOP Marketplace that’s run by the federal government, we are making changes to make sure that you can take advantage of SHOP coverage and the tax credit as soon as  possible. Specifically, for 2014, small employers will enroll their employees in coverage through an agent, broker, or insurer that offers a certified SHOP plan and has agreed to conduct enrollment according to HHS standards.

This process, called “direct enrollment,” is similar to how most small employers get insurance today. You don’t need to apply for SHOP eligibility before enrolling, or to use HealthCare.gov, unless you’d like to see information on your plan options, including which insurance companies offer SHOP Qualified Health Plans in your area.

The agent, broker, or insurer will enroll your employees, and the SHOP Marketplace will review your application and can determine later whether your business and employees are eligible for SHOP coverage. You don’t need to wait for the SHOP to determine your eligibility, because it doesn’t affect your ability to enroll in a Qualified Health Plan, like the ones the SHOP offers. Even if the SHOP later determines that you’re not eligible to enroll through the SHOP, you and your employees may remain enrolled in your chosen plan in the small group market.

The main reason for you to get the SHOP eligibility determination in 2014, is to allow you, to claim the expanded the Small Business Health Care Tax Credit at the end of your tax year—as long as you also meet all the other requirements for the tax credit.

If you don’t think you qualify for the tax credit, you don’t need to apply for SHOP eligibility.  You also have the option to wait until you’ve received an official notice of eligibility from the SHOP Marketplace before enrolling your employees in a SHOP Plan.

Your agent, broker, or insurer can help you fill out a paper application and send it in to the SHOP Marketplace, or you can mail the application in yourself, if you want.  The SHOP Marketplace will notify you about eligibility by phone or e-mail and by regular mail if you request it.

When you use direct enrollment, you can still go on HealthCare.gov to get information about plans available in your area and help you find the best fit for your company and employees. You can also download a paper application for SHOP eligibility there.  Lastly, you can get help through the toll-free SHOP Employer Call Center at 1-800-706-7893 (TTY: 1-800-706-7915).

This change to “direct enrollment” in states with a Federally-facilitated SHOP Marketplace won’t affect the process for getting SHOP coverage in states running their own SHOP Marketplace.

What else you need to know

If you want your employees’ coverage to begin on January 1, the current enrollment deadline is December 15.  In the Federally-facilitated SHOP, we intend to extend this deadline to December 23.

But, you can offer coverage through the SHOP Marketplace at any time during the year. If your employee enrollments are submitted between the 1st and 15th day of the month, your group coverage begins the first day of the next month.  For example, if your employee enrollments are submitted on February 10, 2014, your group coverage begins March 1, 2014. For enrollments submitted after the 15th of the month, coverage begins the second following month. So, if employee enrollments are submitted on February 18, your group coverage will begin on April 1.

Be sure to check HealthCare.gov in coming months for new tools and information.  This winter you will be able to go online and enter the ages of your employees to get more precise premium information, and compare plans.

In addition, we anticipate that small employers throughout the country will have online access to an online SHOP Marketplace by November 2014. Also, for the first time ever, small employers in all 50 States and the District of Columbia will be able to offer their employees a choice of plans from multiple issuers while making a single monthly payment, for coverage taking effect on or after January 1, 2015.

For more information on the SHOP Marketplace, visit HealthCare.gov or call the SHOP Employer Call Center at 1-800-706-7893 (TTY: 1-800-706-7915), Monday through Friday, 9 a.m. to 7 p.m. EST.