Welcome to the third post in our series: "ACA Essentials: Does ACA Compliance for Small Businesses Apply to Me?"
In my last post, I focused on the Small Business Health Care Tax Credit [AA1] and how, for the 2014 tax year and beyond, small employers must purchase health insurance through the Small Business Health Options Program (SHOP Marketplace) in their state in order to qualify for the health care tax credit.
The Small Business Health Options Program (SHOP) Marketplace is intended to give small businesses some of the advantages that large employers have historically experienced such as greater purchasing power, the ability to pool risk, and more health plan choices.
It is open to employers with 50 or fewer full-time equivalent employees (FTEs), including non-profit organizations.
If you participate in SHOP, and meet other criteria, you may be eligible for the Small Business Health Care Tax Credit.
What is the SHOP marketplace?
The SHOP Marketplace allows a small employer to:
- Shop and compare the costs and benefits of health plans and dental plans.
- Offer a choice of health plans (in some states). Employers can select one of four categories of plans (bronze, silver, gold and platinum) and allow employees to choose any plan within that category. The bronze plans have the lowest premium but highest out-of-pocket expenses (about 40 percent of the cost of care). The platinum plans have the highest premium but lowest out-of-pocket expenses (about 10 percent of the cost of care).
- Enroll in and manage coverage online, including choosing a plan, managing employee participation, and paying premiums.
- Control the coverage they offer and how much they pay toward employee premiums. Employees can also enroll online.
So who is eligible to participate in SHOP?
In order to purchase coverage in the SHOP Marketplace, small employers must meet certain criteria:
- 50 or fewer FTEs (Note: Some states may allow employers with up to 100 FTEs to use SHOP beginning in 2016)
- Must have an office or employee worksite within the SHOP's state to use that particular state-run SHOP
- Must offer coverage to all full-time employees (generally, those working an average of 30 or more hours per week)
- In most states, at least 70 percent of full-time employees must enroll in your SHOP plan
However, employers who enroll in SHOP coverage between Nov. 15 and Dec. 15 each year can offer SHOP coverage without meeting the 70 percent requirement.
Enrolling in SHOP
Employers can enroll online at any time by visiting Healthcare.gov. Small businesses can enroll in SHOP any month, any time of the year. There is no restricted enrollment period.
Enter your state and complete the following steps:
- Create a marketplace account and fill out a SHOP application
- Create enrollment criteria
- Select the premium contribution
- Select coverage and make an offer to employees
- Track employee participation
Click here for an infographic from our 2015 ADP Annual Health Benefits Report on the ACA's impact on cost and participation rates for group health benefits.
Next time we'll talk about the Employer Mandate and what it means for your business.
Read the rest of the series:
Visit and subscribe to ADP's "Eye on Washington" for the latest on Health Care Reform and other regulations impacting employers: https://www.adp.com/tools-and-resources/adp-research-institute/research-topics/legislative-updates.aspx
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