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last updated 11/27/2013
Update: On Nov. 27, 2013,
HHS announced plans to further delay a key part of the federal SHOP marketplace. Small employers won't be able to buy plans under the provision until November 2014. Prior to that announcement, it appeared that eligible employers would still be able to purchase a group health plan through the SHOP component of Healthcare.gov that met the PPACA's required four levels of coverage.
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
New York Timesreported 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. [As subsequently announced by HHS, the Healthcare.gov federal marketplace will not offer any plans to small employers until November 2014 for plan year 2015.]
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:
John Arensmeyer, founder and CEO of Small Business Majority, an advocacy group, called the proposed rule "a major letdown for small-business owners and their employees looking forward to robust, competitive exchanges in 2014."
"We understand the proposed rule would only delay employee choice and simplified payments for one year. However, both of these are key in distinguishing the exchanges from the outside health insurance market, which is why we strongly advise against the finalization of these rules," he stated.
"By including employee choice and a simplified, employer-friendly billing process in the health insurance exchanges, the Affordable Care Act can reverse a longstanding market trend that has left small employers on unequal footing for too long. These kinds of benefits have historically been reserved for large businesses and public employees, while small businesses often have to offer a ‘one-size-fits-all’ plan with added administrative hurdles," Arensmeyer said.
Also taking issue with the delay was House Small Business Committee Chairman Rep. Sam Graves, R-Mo.,who on March 27
wrote to the administrator of HHS's Centers for Medicare and Medicaid Services
about his concerns. "Under the proposed rule, small employers wouldn’t be able to select a benefit level on federal exchanges, but would be limited to offering a single plan for their employees, severely limiting the breadth of choice that was originally envisioned, which could lead to increased premium costs," noted Graves, who opposed passage of the health care reform law.
“If one of the key goals of supporters of the health care law was to provide small-business owners with a competitive process by which they could select from a number of affordable health insurance plans for their employees, then that goal is not in sight,” Graves added. “In the meantime, it is likely that entrepreneurs will continue to experience the
premium increases they have come to expect.”
is an online editor/manager for SHRM.
Some States to Offer Employee Choice for Small Businesses,
SHRM Online Benefits, July 2013
SHOP Exchange Delay Limits Small Employers' Options,
SHRM Online Benefits, May 2013
SHRM Online Health Care Reform Resource Page
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