Health insurance is one of the most complex and perplexing aspects of running a small business. Premiums seem to go up magnitudes every year. Carriers change programs and packages. Coverage options shift and underwriting rules vary. In short, it seems nearly impossible for many small business owners to find and secure effective health insurance coverage in such a volatile environment.
The Affordable Care Act (ACA), a.k.a. “Obamacare” was intended to rectify many of these issues, by providing individuals and small businesses with nationwide access to cost-effective, affordable health insurance that provides a consistent (federally mandated) range of coverage.
Despite this, many small business owners have wondered if ACA can make their lives easier – or if it’s just another confusing and unreliable program that can wreak havoc on their business.
The reality is that the ACA is a very complex and confusing law, but small businesses can effectively obtain very competitively priced coverage for their employees and, in some cases, even gain a valuable tax credit to boot. Here are the key steps and strategies you should know about in order to find the right coverage for your small business:
Get to Know the SHOP
First, you should become familiar with the term “SHOP”. The word “SHOP” is an acronym that stands for Small Business Health Options Program (SHOP). SHOP is the ACA-mandated exchange program specifically for small businesses.
Under ACA, small businesses can apply for SHOP coverage at any time, throughout the year. With one online application, on your own or with the help of an agent, broker, or other expert, you can compare prices, coverage options and the quality of plans in a way that’s easy to understand.
The SHOP Marketplace allows you to offer high-quality health and dental coverage that meets the needs of your business and your employees. SHOP offers flexibility, choice, and the convenience of online application and account management.
For 2015 coverage and beyond, you apply for SHOP, choose a plan or plans, complete your coverage offering, manage employee participation, and pay your premiums online. Your employees enroll online as well. You choose whether to offer dependent coverage (some states require it) and dental insurance. You choose how long your employees’ open enrollment period is, and the waiting period before new employees can enroll.
You can use your current agent or broker to help you enroll, find a new agent or broker in your area familiar with SHOP plans, or handle your enrollment yourself. When you apply, you can search for agents and brokers registered to sell SHOP plans by location. You can enroll in SHOP any month, any time of year. There’s no restricted enrollment period when you can start offering a SHOP plan.
In all states, you can offer at least one health plan to your employees. In some states, you can choose a coverage category, like Bronze or Silver, and let your employees choose any plan at in that category.
Small business owners offering coverage through an ACA plan must offer coverage to at least all full-time employees working on average 30 hours per week. Employers can choose to offer coverage to part-time employees if they wish, although it is not required.
For 2015, the SHOP Marketplace is open to employers with 50 or fewer full-time equivalent employees (FTEs). By 2016 those with 100 or fewer FTE will be eligible to use SHOP. The advantages of using SHOP include:
- You control the coverage you offer your employees.
- You can compare health plans online on an apples-to-apples basis, which helps you make a decision that’s right for your business.
- If you enroll in SHOP coverage and have fewer than 25 employees, you may qualify for a Small Business Health Care Tax Credit worth up to 50% of your premium costs.
Please note that the tax credit is available only for plans bought through the SHOP Marketplace. Eligibility for the ACA SHOP tax credit is determined primarily by these factors:
- The employer must have fewer than 25 FTEs.
- The employer must have average employee wages of less than $50,000 a year.
- The employer must purchase coverage through the designated SHOP exchange in the applicable state.
- The employer must pay at least 50% of the cost of single coverage for each employee.
Using SHOP in the State of Maryland
In the State of Maryland, the ACA exchange is operated by Maryland Health Connection (www.marylandhealthconnection.org). The Maryland Health Connection system provides two options for establishing SHOP plans. Maryland small business owners can now offer coverage to their employees in two ways:
Employer Choice Model: In this option, an employer selects one insurance company that offers coverage on Maryland’s SHOP marketplace. Employees may choose any of the SHOP plans across any metal level that insurance company offers. In 2015 this option is available through the SHOP Direct Enrollment Program.
Employee Choice Model: In this option, an employer selects the metal level of coverage that they wish to offer. Employees may choose any plan across all the insurance companies that offer plans at that metal level on Maryland’s SHOP marketplace.
The Maryland SHOP Marketplace is managed by three administrators: BenefitMall, GBS Benefit Services and Kelly Exchange Services. Any of these companies is authorized to assist you further with management and administration of your SHOP coverage.
To learn more about Maryland SHOP and to enroll, go to:
Using SHOP in the District of Columbia
In the District of Columbia (Washington, D.C.), the ACA exchange is operated by DC Health Link (www.dchealthlink.com), a unit of the D.C. Health Benefit Exchange Authority. The current program provides health coverage options for small businesses from Aetna, CareFirst, Kaiser Permanente and United HealthCare.
To participate, a business must be located in the District of Columbia, have 1-50 FTEs as of the prior calendar year, and have a valid federal Employer Identification Number (EIN).
The DC SHOP exchange also provides for four different coverage levels (Platinum, Gold, Silver and Bronze). In addition, the District is mandating the use of the DC Health Link exchange for all small business health insurance sold in the District of Columbia, essentially making DC SHOP the sole-source provider for small business health insurance. This is intended to ensure that coverage is equitable for all small businesses within D.C.
The first step to securing small business coverage in the District of Columbia is either to contact your existing D.C.-licensed insurance broker or agent, or to register with DC Health Link online:
Additional questions may be answered in the DC Health Link FAQ or the Resource Guide, both of which area available at:
Overview of the SHOP Marketplace
How to Apply for SHOP Coverage
DC Health Link FAQs
Obamacare for Maryland Small Businesses
Maryland Health Connection FAQs