Small Employers Shop the SHOP Exchange

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Starting in 2014, small employers may chose to make health-care coverage available to their employees through the Small Business Health Options Program (SHOP). The SHOP Exchange, also known as a SHOP Marketplace, allows the employer to select qualified health plans in the small group market from which employees may get coverage. The employer chooses a level of coverage and its contribution. Employees then pick from among the plans and levels offered. The SHOP bills the employer for its premium contribution for its employees each month then uses the collected amounts to pay the insurance companies that provide the coverage.

In 2014, SHOP Exchanges are open to employers with 50 or fewer full-time and full-time-equivalent employees. The SHOP Exchange is not available to sole proprietors or certain owners of S corporations if they do not have common-law employees.

Employers’ selections and some SHOP functions are limited for the 2014 calendar year plan year. More options may be available in a state-based SHOP Exchange than in one operated in connection with the federal government. This might be a consideration for an employer deciding whether to offer employees coverage through the SHOP serving its principal business address or through the SHOP serving the employee’s primary worksite.

Generally, small employers may begin reviewing their choices in October 2013 and SHOP functions become fully operational in November 2013. Coverage will begin on January 1, 2014, if enrollment is completed by December 15, 2013. Small employers can take advantage of monthly rolling enrollment throughout the year. However, keep in mind that employees relying on employer-provided coverage to avoid the individual mandate penalty will need to begin coverage by March 1, 2014.
Will you shop the SHOP Exchange?

–Nadia Masri
Editor (Compensation Planning)

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