What is the SHOP Marketplace?
The Small Business Health Options Program, or SHOP for short, was created to offer assistance in providing health insurance to employees of small business owners or non-profit organizations that staff 50 or less full-time equivalent (FTE) employees. Part-time workers who average less than 30 hours per week or certain types of seasonal workers are not-factored into this calculation.
This program was designed to be flexible for small business owners to offer healthcare, dental insurance to their employees, as well as provide convenient online services, such as application and management capabilities to meet the needs of their business and the people that make it run.
The SHOP Marketplace does require certain criteria to be met to be utilized by a small business owner.
- You must have 50 full-time workers or fewer
- Health coverage must be offered to all full-time employees
- You must have an office or work site within SHOP’s servicing area being that is operated by either a state agency or a federal one.
- You meet your state’s percentage requirement for enrollment. Each state sets this requirement but most require a minimum of 70% FTE participation in your SHOP plan. However, if you enroll your employees for SHOP coverage between November 15th and December 15th every year, you are exempt from meeting this requirement.
As a small business owner, what are the guidelines for providing coverage for my employees?
Small business owners may qualify for some health care-related tax credits depending on certain criteria that can reach up to 50% of the employer portion of your employee’s premium costs or 35% for tax exempt employers. To qualify, you must meet the following criteria:
- You have less than 25 full-time (full-time equivalent) employees.
- The average yearly salary per employee is around $50,000 or less.
- You pay at least half of the premium costs of your full-time employees.
- You offer SHOP Marketplace coverage to your full-time employees
As a small business owner looking for the tax credit, you are not obligated to offer health coverage for part-time employees that work under 30 hours per week, seasonal workers that work under 120 days during the tax year, as these are not considered full-time equivalent employees.
The size of your staff comes into play, when considering how much tax credit you may receive as an employer. For example, if you have less than 10 employees with an average salary of $25,000 or under, you would qualify for the highest tax credit currently offered. As mentioned earlier, you must purchase SHOP Marketplace coverage among other requirements to qualify.
What kind of coverage can I offer my employees through the SHOP Marketplace?
The SHOP Marketplace separate their plans into four different metal categories. Although the coverage may be similar in all four categories in terms of quality and services offered, the differences will lie in the cost sharing. Depending on which metal category your plan is in, this will affect things such as premiums, deductibles, copayments, etc.
- Bronze plan covers approximately 60% and leaving 40% to be covered by the employee
- Silver plan covers approximately 70% and leaving 30% to be covered by the employee
- Gold plan covers approximately 80% and leaving 20% to be covered by the employee
- Platinum plan covers approximately 90% and leaving 10% to be covered by the employee
It is important to know that all SHOP Marketplace plans are required to cover minimum essential coverage, pre-existing condition benefits, and some preventative coverage. However the difference between the categories are largely financial ones. Typically a lower premium plan, such as what you’d find in the bronze plan, will require a higher deductible. Consequently, a higher premium plan in the Platinum category will require a lower deductible in comparison. This is something you will consider when choosing a plan to meet the needs of your employees.
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What is an employee choice option?
It is acceptable to offer one plan to your employees. However some states allow an employee choice option in which a small business owner may offer multiple plans for their staff, if they choose to do so. You may want to check with your state to see if you are in an employee choice option state.
The 2015 Employee Choice Option states are as follows:
- North Dakota