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Navigating health reform
Small Employer Online Enrollment in Health Exchange Plans Delayed
On November 27, 2013, the White House announced a one-year delay in online enrollment into the Small Business Health Options Program (SHOP) part of the federally facilitated health insurance exchange. This affects small employers in the 36 states that offer a SHOP. Online enrollment should be available by November 2014.
Small employers seeking to claim the Small Business Health Care Tax Credit in 2014 will still need to complete the enrollment process to be eligible for the credit for their 2014 plan year.
During this delay, small employers may still compare health insurance premium costs and plans on the SHOP exchange website; however, they will not be able to enroll their employees. Eligible small employers will need to use a broker, an agent, or an insurer to sign up and participate in the SHOP health insurance plans, and then enroll their employees through a paper application process filed with the SHOP exchange.
“Small businesses may work with their existing broker or agent, or an insurer offering a certified SHOP plan or contact a certified broker to complete and file the application,” says Kelly Davis, a employee benefit plans manager at CliftonLarsonAllen.
Approval of the application takes 7 to 10 days. Coverage will begin January 1, 2014, for those who complete the enrollment process prior to December 23, 2013, are approved, and have paid premiums.
Shopping for insurance
The Affordable Care Act prompted the development of health insurance exchanges as marketplaces for small businesses and individuals to shop for and enroll in health insurance. Each state was required to either establish its own health insurance exchange and corresponding web portal, submit to participate in a federal partnership exchange, or make a federally facilitated exchange available to the state’s residents. Thirty-six states elected to use the federally facilitated exchange, while 14 states and Washington, DC created their own state-based exchanges.
Beginning January 1, 2014, small employers may offer a SHOP exchange plan as their employer-sponsored health plan. Businesses with 50 or fewer full-time employees and full-time equivalent employees are eligible to participate in the SHOP for the state where their principal business is located.
The SHOP is a marketplace program where small employers can shop for health insurance, compare costs, and enroll eligible employees into one or more employer-sponsored plan(s). Through the SHOP, small employers offer their employees one or more health insurance plans where the employer makes a defined contribution and the employees select the plan to which they want to apply the contribution. For 2014, small employers participating in the federally facilitated SHOP can only offer one plan option to their employees.
Small employers covered by a state-based exchange may not be impacted by this delay because most have online enrollment access to their state-based SHOP exchange, and in some cases, will be able to offer employees multiple plans in 2014.
Small Business Health Care Tax Credit
After January 1, 2014, small employers that wish to claim the Small Business Health Care Tax Credit will only be eligible for the credit if they offer a SHOP exchange plan to their full-time employees. The U.S. Department of Health and Human Services has indicated that this requirement stands even though the online enrollment function has been delayed.
Small employers with non-calendar-year plan years can still claim the credit for all of tax year 2014, as long as they begin offering a SHOP exchange plan when their new plan year starts (e.g., July 1). Employers will need to work with their insurance broker or agent, or the insurer for the SHOP exchange plan they wish to enroll in, to complete the necessary paper application process to participate in the SHOP marketplace.
It should be noted that small employer participation or enrollment in the SHOP is not limited to the exchange’s March 31, 2014, open enrollment deadline for individuals. Typically, small employers should initiate the SHOP enrollment process at least 60 days prior to the end of their plan year. However, small employers seeking to have their employee health plan coverage begin January 1, 2014, will need to complete this enrollment process by December 23, 2013, if using the federally facilitated SHOP. If a state has its own exchange, this deadline is more likely to be December 15, 2013.
Small employers impacted by this delay are encouraged to reach out now to brokers, agents, or insurers for assistance in obtaining health insurance coverage through their state exchange.