The Future of SHOP Plans

As of June 2014, all of the Small Business Health Options Programs (SHOPs) required by the ACA, were operational, but many features were not yet available, and enrollment was low, according to a report by the Government Accountability Office (GAO). According to CMS, all 33 of the federally facilitated SHOPs and 14 of the 18 state-run SHOPs were accepting enrollment applications as of the October 1, 2013, deadline. The remaining four state-based SHOPs became operational by the following May.

Websites, where employers could review premiums and benefits, were available on October 1, 2013 for all federally facilitated SHOPs and most state-based SHOPs. Other key features were delayed for all federally facilitated SHOPs, but available for most state-based SHOPs, such as online enrollment and the employees’ ability to choose among multiple plans.

CMS is gearing up for online enrollment for all federally facilitated SHOPs for 2015. Enrollment for the state-based SHOPs has been significantly lower than expected. As of June 1, 2014, the 18 state-based SHOPs had enrolled about 76,000 people including employees, their spouses, and dependent children in plans purchased through nearly 12,000 small employers. CMS is expected to have complete enrollment data for the federally facilitated SHOPs by early 2015. CMS officials don’t expect major differences in enrollment trends for 2014 among state-based and federally facilitated SHOPs. Most SHOPs had multiple plans  in each county, although a small number of states had counties with no plans available.

Premiums for SHOP plans are generally comparable to premiums for other non-SHOP small group plans. Many stakeholders say that getting the small business tax credit is the primary incentive for employers to use the SHOPs. However, many employers are not motivated to enroll because the credit is too small and too complex to administer. Also, employers can still renew plans that existed before the SHOPs until October 1, 2016, depending on state requirements. Also, employers have misconceptions about SHOP availability. Other factors that may hinder enrollment growth are the two-year limit on the small business tax credit and the likelihood that SHOP premiums will not be lower than non-SHOP premiums.

Factors that may stimulate enrollment growth include the phase-out of pre-SHOP plans, the implementation of employee choice with an increasing number of SHOPs, improved coordination with agents and brokers, and increased marketing to small employers. For more information, visit GAO

Last Updated 10/20/2021

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