04.12.13 |
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HHS “Partially” Delays Implementation of SHOP Exchanges

This article was originally featured in our ADP Eye on Washington update.

On March 11, 2013, the U.S. Department of Health and Human Services (HHS) issued a proposed rule that delays a portion of the Small Business Health Options Program, also known as the SHOP Exchange. Under the Affordable Care Act (ACA), states are required to establish health insurance Exchanges by January 1, 2014 to assist both individuals and small employers with purchasing health insurance.  States have the option of establishing their own health insurance Exchange, partnering with the federal government to run an Exchange, or opting out. If a state declines to establish an Exchange, the ACA requires the federal government to run the Exchange for the residents of that state.

According to the Henry J. Kaiser Family Foundation, as of April 1, 2013, a total of 26 states have indicated that they will not establish a state Exchange or a joint state-federal “partnership” Exchange, and will default to the federal Exchange. HHS’s proposed rule delays until 2015 the ability of a small employer that purchases insurance coverage through the federal SHOP Exchange to choose multiple health plans to offer its employees (the so-called “employee choice model”). Until 2015, the federal SHOP Exchange will, instead, assist small employers in choosing a single qualified health plan to offer their employees. (For these purposes, a “small employer” is defined as an employer that employed, on average, 100 or fewer employees on business days during the prior calendar year. Until 2016, states may reduce the 100 employee limit to 50 employees.)

State-operated SHOP Exchanges may, but are not required to, apply the same restrictions. This proposed rule is intended to provide the government with additional time to prepare for an employee choice model. It is important to note that the delay of the employee choice model in the federal SHOP Exchange does not delay application of the ACA’s Employer Shared Responsibility provisions, which are generally effective January 1, 2014. It also does not delay the requirement that a small employer obtain coverage through the SHOP Exchange in order to be eligible to receive the small business healthcare tax credit for taxable years beginning on or after January 1, 2014.

No action is required by small employers at this time – they will still be able to participate in a SHOP Exchange in 2014. However, employers that purchase health insurance through the federal SHOP Exchange will be limited to choosing one qualified health plan for their employees until 2015. The federal government expects that small employers will have the ability to choose multiple qualified health plans through the federal SHOP Exchange beginning in 2015.

Learn more about ADP solutions to help employers stabilize their approach to ACA compliance.

One comment on “HHS “Partially” Delays Implementation of SHOP Exchanges”

  1. An outstanding share! I’ve just forwarded this onto a co-worker who had
    been doing a little homework on this. And he in fact ordered me dinner due to
    the fact that I stumbled upon it for him… lol. So let me reword this….
    Thanks for the meal!! But yeah, thanx for spending some time to talk about
    this issue here on your blog.

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