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Small Business Health Options Program (SHOP) FAQ

Guidance for FAQ regarding Employer/Employee Interaction and Eligibility

Program Area: Small Business Health Options Program (SHOP)

Question: In States with an FFE, will the State definition be followed in States that define small group as 2-50 employees?

Answer: Section 2791 of the PHSA defines the small group market for employers with 1 - 100 employees. Flexibility is provided to State-based Exchanges in 2014 and 2015 regarding the upper limit of the small group market (the state may reduce the upper limit to 50) and the method of determining employer size for the state's small group market - not regarding whether or not a group health plan exists. As described in the preamble to the Exchange Final Rule (77 FR 18398) A State-based SHOP may use both the numerical upper limit and the state method of determining employer size. The FF-SHOP will use the state's numerical upper limit (50 or 100) but must use the FTE method of determining employer size. States, State-based SHOPs, and FF-SHOPs must use ERISA/PHS Act provisions that prevent a business without at least one common law employee from forming a group benefit plan (sole proprietors, certain S-corp shareholders, and family members of either are not common law employees).

Issued by: Centers for Medicare & Medicaid Services (CMS)

Issue Date: April 11, 2013

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