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SHOP Delayed (and What That Means to Individuals and SMBs)

business-health-care-delayTo be clear, SHOP, or the Small Business Health Care Options Program, is a piece of the Health Reform Act (in addition to HIX which are the Health Insurance Exchanges for individuals) that has been delayed. Specifically, SHOP is an insurance exchange that is intended to provide small businesses a range of choices.

So what does the postponing SHOP do in the meantime? Well, it seems that businesses that fit into this category now have but one viable plan, contrary to what was promised, at least for the time being.

Why the delay?

Neil Trauntwein, an employee-benefits lawyer for the National Retail Federation, says the delays have at least allowed business leaders to return to Capitol Hill to discuss such issues as whether the cutoff for the employer mandate should be less than 50 full-time employees and if a 30-hour week is the best definition of a full-time worker.

It is important to note that this one-year delay will impact the 33 states that are using federally facilitated or partnership SHOP Exchanges. There are 17 states that are implementing state-based SHOP Exchanges that have the option to choose between limiting a small group employer to one benefit plan choice for its employees or could allow the employees of a small group to choose among several Qualified Health Plans in 2014. For list of which states have state SHOP Exchanges, the information is posted on the federal government’s health care reform website. Certainly the endgame is uncertain when it comes to SHOP, however, we still must prepare for the rest of Healthcare Reform.

In the meantime, there are other aspects of the Healthcare Reform Act that remain on schedule and are seemingly ramping up. Currently, state and federal officials are racing to set up new online health insurance exchanges, where lower-to-moderate income families that lack health insurance will be able to sign up for federally subsidized coverage beginning on October 1. The poor will also be able to sign up for Medicaid coverage in 23 states that have opted to expand the program.

Additionally, most large employers already offer health insurance and CBO (Congressional Budget Office) said few are expected to drop coverage because of the delay. Nevertheless, it seems the SHOP delay will have its effects by NOT being available.

For example, the change will result in a $10 billion reduction in penalty payments that some employers would have made in 2015 for failing to provide coverage next year, estimates the CBO. They also predict it means another $3 billion in added costs for exchange subsidies.

Why?

Basically, it is because about half of the 1 million workers who would have gained employer-sponsored coverage next year will now obtain insurance through the exchanges or via public programs including Medicaid.

It should be pointed out that an increase in in taxable compensation (resultant of fewer people enrolling in employment-based coverage) would offset those factors by about a third.

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