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What is the Small Business Health Options Program (SHOP)?
Pursuant to The Patient Protection and Affordable Care Act (PPACA), all states will be mandated to set up a health insurance exchange for individuals and small businesses prior to the calendar turning to 2014. If a state doesn’t establish a health insurance exchange before then, the federal government will step in and establish one for them.
The health insurance plans made available in the Small Business Health Options Program (SHOP) will be set up and operated by private health insurance companies. They will run very similar to the way group health insurance plans that you may be familiar with. You and your employees will have a choice of qualified health plans, and you will be able to compare health insurance plans based upon coverage, price, and other plan features. As a small employer, you will be able to offer your employees multiple plans to choose from.
How does the Small Business Health Options Program (SHOP) work?
SHOP programs will operate under exchanges, or marketplaces, which will ultimately decide how the Small Business Health Options Programs is structured. The state-based exchanges will act as an aggregator compiling individual health insurance policies sold by private insurers. The SHOP exchange will be available for small employers with fewer than 100 employees and the self-employed, including independent contractors who can choose the coverage that best suits their needs. If you think of Orbitz, Travelocity, and Expedia for travel, SHOP will operate similarly.
What is the timing for the start of the Small Business Health Options Program (SHOP)?
State-run exchanges will have the ability to launch a SHOP beginning in 2014. Until 2016, states have the option of setting the size of the small group marketplace at either 1 to 50 employees or 1 to 100 employees. In other words, for 2014 and 2015, individual states can decide whether they want to include small businesses with 100 or less employees or 50 or less employees. In 2016, it will be a requirement that all businesses with 100 or less employees purchase health insurance through these exchanges.. Beginning in 2017, states will have the choice to permit businesses over 100 employees also purchase group health insurance coverage via the Small Business Health Options Program.
Overall, SHOP exchanges have the mission to help small businesses who struggle high health care costs and offering health insurance to their employees.
The first exchange open enrollment program is expected to be ready by October 2013. The first health insurance coverage from the exchange will have an effective date of January 1, 2014.