Health Insurance Plans For Small Businesses
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The Small Business Health Options Program, commonly called the “SHOP” Marketplace or exchange, was established under the Affordable Care Act. The new program helps small businesses subsidize or cover the cost of health and dental insurance premiums for their employees. In addition to the benefits of the SHOP Marketplace, qualifying small businesses that participate in the program also might be eligible for the Small Business Healthcare Tax Credit.
- Qualifications For The SHOP Marketplace
- Process To Get SHOP Marketplace Plans
- Can Business Owners Cover Themselves and Their Family Members?
Qualifications For The SHOP Marketplace
A small business must meet all of the following requirements to participate in the SHOP marketplace:
The small business must have 50 or fewer full-time or equivalent employees (FTEs) to offer SHOP Marketplace health plans. Equivalent employees are any number of part-time employees that work an aggregate number of hours equal to the number that a full-time employee would work. SHOP defines a full-time employee as anyone who works an average of 30 or more hours per week. That means, for example, two part-time employees who each work 15 or more hours would count as one full-time employee toward SHOP Marketplace eligibility. The law was written this way to prevent companies with a small number of full-time and a large number of part-time employees from benefiting from the program intended to help small businesses.
Beginning in 2016, states running their own SHOP Marketplace can choose to expand the small business health insurance program to include companies with up to 100 full-time employees or the equivalent. The federal SHOP Marketplace through HealthCare.gov was originally intended to expand to include small businesses with up to 100 employees in 2016, but that component of the law was removed. This is significant because in 2016, penalties begin to apply to businesses with more than 50 employees who do not offer health benefits to their workers. Prior to 2016, these penalties applied to small businesses with more than 100 full-time employees or the equivalent.
Some company affiliates are not considered employees and do not count toward the maximum number of employees allowed. These individuals include owners, co-owners, spouses of owners and co-owners, COBRA enrollees and retirees.
Health insurance must be offered to all full-time employees. Generally, any employee averaging 30 hours of work per week (or more) is considered full-time and must be be offered health insurance coverage for the small business to participate in SHOP. Small businesses are not required to offer health insurance plans to employees averaging less than 30 hours per week (part-time) and seasonal employees, although they are permitted to.
At least 70% of the employees offered insurance plans must enroll in a small business SHOP Marketplace plan offered by the company, or they must have coverage from another source (for example, a spouse). If the percentage cannot be met, the small business can still offer SHOP Marketplace plans, except employees will have to enroll during an annual period. Every year between November 15 and December 15 (the beginning of the Affordable Care Act’s open enrollment period) small businesses can enroll in the SHOP Marketplace, regardless of the participation rate of their eligible employees. Depending on the state where the small business is located, the minimum percentage of participants for small business to offer plans immediately can differ.
The small business must have an office or employee work site within the state whose SHOP Marketplace the company plans to participate in. Small businesses with employees in more than one state, and owners with multiple businesses in one state or more can still participate in the SHOP Marketplace. We’re detailed their options for each of those circumstances here:
Businesses with employees in more than one state create their SHOP Marketplace account in the state where the primary business is located. However, there are two ways they can offer employees SHOP insurance.
The business can choose to offer a multi-state or national provider network plan to all full-time employees. In choosing this option, all full-time employees and the equivalent across all states would count toward the SHOP maximum number to qualify.
A business also has the option to create additional SHOP Marketplace accounts in each state where employees work and offer them different health plans. As long as the business meets all of the SHOP Marketplace qualifications, it can create an account in any state, even if it’s for just one employee. There are only a few stipulations small businesses must meet if they plan to create SHOP accounts in multiple states. The employer must have a business address in each state and it must offer all full-time employees a plan, no matter which state they are located in.
Owners of multiple businesses in one or more states might be able to get separate SHOP Marketplace accounts for each business. Only one SHOP Marketplace account is permitted for each employer identification number (EIN) and all business under each number must qualify as a group. That means while two businesses might qualify individually for SHOP Marketplace plans, they might have too many employees as a pair if they are under the same EIN. However, owners of multiple businesses can get separate EINs for each business, meaning each one might qualify for an independent SHOP Marketplace account.
Process To Get SHOP Marketplace Plans
Small business owners interested in offering SHOP Marketplace plans to their employees first need to create an account at the Small Business section of HealthCare.gov or on their respective state’s healthcare exchange. Through one or the other, the owner can then apply to the program. Once a small business has been been approved for the program, it should consult agents, brokers, navigators, online resources or the SHOP Call Center at 1-800-706-7893 to help them with choosing a plan and the enrollment of their employees.
The process for employees to enroll in the SHOP Marketplace is easy. If an employee is offered a SHOP health insurance plan by their employer, they will receive an email or letter explaining their options and the steps to either enroll or decline coverage. Included in the email or letter will be a participation code or “SHOP Unique Code.” Employees need to have this available at the time of their call or when they visit the HealthCare.gov Small Business section for employees, or the website for their state healthcare exchange. Employees generally do not accept or decline coverage through their employer - they must do this over the telephone or online.
New employees joining a company will have an opportunity to join a SHOP marketplace plan. Small businesses choose how long a new employee must work for the business before they become eligible to enroll and how long their initial enrollment period lasts. Existing employees who did not join during their initial enrollment period will have to enroll in the plan during an annual open enrollment period at the end of each year. Otherwise, there is a long list of qualifiers for a Special Enrollment Period.
Can Business Owners Cover Themselves and Their Family Members?
As long as at least one full-time employee enrolls in a small business SHOP Marketplace plan, an owner also can enroll and cover himself or herself. Contrary to what appears on the HealthCAre.gov website and widely reported, the full-time employee can be a dependent and qualify the owner for a plan offered through the owner’s SHOP account. A federal SHOP Marketplace employee confirmed this Jan. 8, 2016 and said the information on the website simply hadn’t been updated yet.
Prior to 2016, a dependent could participate in a SHOP Marketplace health insurance plan for a business that, for example, their parent owned. However, they could not be the qualifying employee to participate in the plan and make their parent eligible to enroll. Before 2016, the full-time employee could not be a dependent.
