Health care reform
The Small Business Health Option Program (SHOP) exchanges are slated to open in 2014, providing a new insurance marketplace for businesses with fewer than 50 employees. For that first year, however, the marketplace won’t offer much in the way of choice.
In April 2013 the Obama administration delayed the requirement that SHOP exchanges offer a variety of competing insurance plans to individual employees. While the 33 states with federally run exchanges will have multiple plans, each employer will be limited to selecting just one plan for all its employees in 2014. The states running their own exchanges have the option to limit employers to selecting only one plan.1
The intent of the SHOP exchanges is to provide a vehicle through which small employers can offer employees a variety of approved health plans from a variety of insurers. Employers would select broad benefit levels and cost-sharing arrangements, and employees could then select the plan that best fits their needs and budget.
However, insurers asked that the administration delay the requirement, because the final rules for the SHOP exchanges were not issued until March of 2013. Two states — California and Connecticut — are on course to offer choices on their state-run SHOP exchanges next year.2
Employers will need to understand how the exchanges work, especially small employers who want to offer insurance through the exchanges to their employees. Those employers will need to understand what the SHOP exchange is offering and whether it is a benefit option that makes sense for its employees. All employers will also need to communicate much of this complex information to their employees.
The exchanges are intended to make it easier for employees to access and compare health insurance policy information, and to obtain subsidies for insurance costs, if they are eligible. This delay means employees of small employers may still be able to get health coverage through the SHOP exchange, but most will not have a choice of plans in 2014.