Executive Summary: The Department of Health and Human Services ("HHS") recently announced that full implementation of the SHOP component of the state-based health insurance exchanges created by the Affordable Care Act (the "ACA") run in full or in part by the federal government will be delayed until 2015. States setting up their own exchanges will be given the option to elect to similarly delay full implementation of their SHOPs until 2015.
Practical Impact:
- Under the ACA, starting in 2014 small employers would have been able to select a particular level of coverage that they want to offer their employees, and then their employees would have had the ability to choose from multiple plans within that level of coverage.
- For these purposes, a "small employer" is an employer that employed an average of at least one but not more than 100 employees on business days during the preceding calendar year, and employs at least one employee on the first day of the plan year. States generally have the option to define "small employer" by substituting "50" for "100" until 2016.
- While participation in a SHOP is voluntary, certain qualified employers can receive tax credits for offering health care coverage through a SHOP.
- HHS has proposed a transition rule for 2014 whereby small employers will be able to participate in the exchanges, but will be required to choose just one qualified health plan option for their employees, instead of allowing employees the ability to choose from multiple plans.
- States setting up their own exchanges will be given the option to elect to delay full implementation of their SHOPs until 2015.
- According to HHS, "[t]his transitional policy is intended to provide additional time to prepare for an employee choice model and to increase the stability of the small group market while providing small groups with the benefits of SHOP in 2014."
The Bottom Line:
If you are a small employer and planned to offer health coverage to your employees through the SHOP Exchange, you should determine whether you will offer your employees coverage through the transition rule for 2014. Additional agency guidance is expected to clarify how and when this decision must be made.
FordHarrison's Employee Benefits Practice Group can assist you in evaluating your health care coverage options, and your overall strategy for complying with Health Care Reform.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.