The U.S. Department of Health and Human Services (HHS) issued a proposed rule delaying by one year, until 2015, a requirement that government-run health insurance exchanges offer small businesses and their employees the opportunity to select among competing plans through health care reform’s Small Business Health Options Program (SHOP). HHS cited administrative delays that will prevent the exchanges from meeting the original deadline for including SHOP options. The exchanges are intended to be available by October 2014 for plan year 2015.
The proposed rule was published on March 11, 2013, but the provision delaying SHOP’s implementation was not widely commented on until the New York Times reported about it on April 1, which also was the final date for submitting comments to HHS. A final rule is expected shortly.
Under the HHS proposal, in 2014 the exchanges that will be run fully or in part by the federal government on behalf of 33 states would offer only one SHOP plan to small businesses, rather than allowing them to pick from a range of competing options. The 17 states that have opted to run their own exchanges could choose to enact a similar delay or to implement SHOP in full for 2014.
As described in an earlier HHS fact sheet, SHOP will allow small employers to offer plans from multiple insurers to their employees but receive a single bill and write a single check. Small employers purchasing coverage through SHOP might be eligible for a tax credit of up to 50 percent of their premium payments if they have 25 or fewer employees, pay employees an average annual wage of less than $50,000, offer all full-time employees coverage and pay at least 50 percent of the premium.
The federal government will structure SHOP on the exchanges it administers. Exchanges run by the states (and the “partnership” exchanges run jointly by states and the federal government) will decide how their SHOP is structured, and will have flexibility with regard to:
- Size of small businesses that can participate. States can set the size of the small group market at one to 50 or one to 100 employees until 2016. In 2016, employers with between one and 100 employees can participate in SHOP. Starting in 2017, states have the option to let businesses with more than 100 employees buy large group coverage through SHOP.
- Structure of choices for small businesses.Exchanges can choose to offer employers additional ways to provide coverage through SHOP, including allowing their employees to choose any plan in all levels of coverage or a traditional “employer choice” offer of a single plan.