Obamacare: Shop Exchanged Update

The Affordable Care Act (ACA) established SHOP exchanges to allow “qualified employers” to purchase qualified health plans for employee coverage. Qualified employers generally relates to employers with 50 or less employees.

Each state has the ability to choose whether to set up and operate their own exchanges, or to have the federal SHOP exchange be available to the employers in it’s place. Online enrollment is available through some of the state-run SHOP exchanges, however some of the state-run SHOP exchanges are not yet even fully-functional.

On October 1, 2013 the federal SHOP exchanges began operating and paper applications were only available. The Obama Administration announced on November 25, 2013 that the electronic enrollment in federal SHOP exchanges has been delayed to the 2015 open enrollment period of November 2014. Small business owners (businesses with under 50 employees) should take note to some important points related to this delay:

  • The delay in the electronic enrollment to the federal SHOP exchanges is related to the electronic enrollment process. Meaning, that small employers can still purchase qualified health plan coverage through federal SHOP exchanges, however they will have to enroll in qualified health plan coverage either by working directly with a participating insurer, or by utilizing their own insurance agent or broker.
  • After January 1, 2014, the small employer tax credit available under the Affordable Care Act (ACA) is only available to employers whose employees enroll in a qualified health plan offered by the employer through a SHOP exchange, (with limited transition relief for certain non-calendar year plans).

So, if a small employer is seeking to use federal SHOP exchanges, they must contact a broker or insurance company that offers plans through the federal SHOP exchange. That broker or insurer can help the employer select a qualified plan, then will have to submit a paper application for SHOP eligibility to the federal SHOP exchange. The application is used to determine whether or not the employer is eligible for the ACA small business tax credit. Notification of eligibility will take place, according to the HHA guidance, via phone and e-mail, as well as by mail if requested. Going forward, the HHS has indicated that employers should receive notification of eligibility within 3-5 days of receiving a fully completed application. Regardless, a small employer can enroll its employees immediately in the selected plan- it isn’t required to receive official notice of eligibility. Coverage will not be terminated, should the employer not qualify for the small business tax credit.

It is important to note that an employer can only receive the tax credit for 2014 (and later years) if the employer purchases coverage through an exchange and receives eligibility determination from the SHOP exchange.

Employers with non-SHOP coverage in effect as of August 26, 2013 can maintain non-SHOP coverage for the duration of 2013, as per the limited transition relief, and still receive the tax credit for all of 2014 so long as they enroll in SHOP coverage for the next plan year that begins in 2014.

Finally, while employers cannot enroll electronically in the federal SHOP exchange, they can go to http://www.healthcare.gov to compare qualified health plans available through the exchange and obtain best pricing information.

Read full announcement here.

View frequently asked questions (FAQs) here.

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