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How Small and Household Employers can Offer Health Insurance

Posted by HomeWork Solutions on 11/9/17 9:00 AM
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Health coverage for small employers

The Affordable Care Act allows small employers to make health coverage available to their employees through the Small Business Health Options Program (SHOP). The 21st Century Cures Act enacted another option as well, the Qualified Small Employer Health Reimbursement Agreement (QSEHRA).

A SHOP must permit a qualified employer to buy coverage for its employees at any point during the year (“rolling enrollment”) provided they meet certain requirements. A QSEHRA comes into play when a small business does not offer any form of group health plan, this is the common way household employers offer health benefits to their employees. To find out the rules for how a QSEHRA works, check out this post. For details about a SHOP continue reading.

Minimum Participation

Under the Affordable Care Act, SHOPs are intended to allow eligible small businesses to offer employees a variety of qualified health plans. For SHOP purposes, a small employer is one with at least one and not more than 50 employees on business days in the preceding calendar year. (There is an option for states to expand the cutoff to 100 employees.) A SHOP is required to operate in each state. If a state hasn’t established one, the federal government operates a federally facilitated program for small employers in that state.

Under a SHOP’s rolling enrollment, the employer’s plan year is the 12-month period beginning with the plan’s effective date of coverage. But SHOPs may apply a minimum participation requirement. In most states, this means that at least 70% of employees must accept the offer of SHOP coverage (or be enrolled in other qualifying health coverage) in order for the employer to participate in the program. States can’t, however, impose such a requirement during an annual open enrollment period from November 15 through December 15 of each year.

Accurate Prediction

Thus, while your company may sign up for SHOP coverage at any time during the year, you must satisfy the minimum participation requirement unless it’s an annual open enrollment period. A calculator is available here to help employers predict whether they’ll meet the minimum participation SHOP enrollment requirement. Of course, it’s also important to keep an eye on Affordable Care Act developments in Washington, which could affect the SHOP.

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