As if the Obamacare rollout hasn’t been confusing enough, there’s now another complication to contemplate: the Small Business Health Options (SHOP) exchange will not accept online enrollments until November 2014. SHOP, which provides insurance plans for companies with fewer than 50 employees, was designed to make it easy for small business owners to provide affordable health care, but the inability to enroll online certainly complicates the task.
Now what? First, it's important to understand the scope of this latest Obamacare delay. Companies interested in shopping for a SHOP plan can still do so—you can view available plans on the federal site. But to enroll, you’ll need to go to a broker or straight to the insurance carrier offering the SHOP plan you choose.
If you live in a state that has its own healthcare exchange, this delay might not affect you at all. Some states, including California and Colorado, have fully functional SHOP exchanges up and available for online enrollments. Check your state’s exchange for details on the deadline to enroll for a plan effective January 1, 2014. On the federal exchange the deadline was extended to December 23, and many states have followed suit.
Most insurance experts agree there are still some companies that should endure the hassle of enrolling in a SHOP plan: those who are eligible for tax credits. That's because despite the latest delay, it is still true that you must purchase a SHOP plan to get a tax credit in 2014. And for a small subset of companies—particularly those with fewer than 10 employees and average wages of $25,000 or less—the credits can be significant.
Be aware, though, that plan choices for 2014 may be limited and could vary significantly by state, advises Cameron Kennedy, chief financial officer of Cambridge Consulting Group in Troy, Mich. "From what I’ve learned from our carriers here in Michigan, the bottom line is there will always be more plan options and more flexibility off the SHOP," Kennedy says. "The only real benefit to going to SHOP is you have to be on a government exchange to get that small business tax credit."
If you choose to ditch the SHOP option, but you still want to provide health benefits, you may be able to purchase a low-cost 2013 plan—but you have to act fast. If you already have a plan in place and you renew it by the end of December, you may be able to lock in your current premiums, thereby avoiding the rate increases expected across-the-board for plans that comply with the Obamacare regulations that go into effect January 1. Or you can enroll in a new plan, and choose an effective date of December rather than January.
Anthony Lopez, manager of the small-business group at Mountain View, Calif.,-based eHealthInsurance, says small companies are racing to purchase 2013 plans. "We’re getting a flood of calls from customers saying 'I've seen the January rates. I need to get a quote for a December 15th effective date,'" Lopez says. "It’s one of the busiest Decembers I can remember." Many carriers are now giving companies until Christmas to apply for a 2013 plan with a December effective date, Lopez says.
One positive outcome of the ongoing delays—not only with the health exchanges, but also with the employer mandate for companies with more than 50 employees—is that entrepreneurs now have plenty of time to educate themselves about their options for 2015, says Rick Ninneman, Colorado regional director of Poms & Associates Insurance Brokers in Denver. "Employers have an opportunity to gain a level of education that will allow them to make high-quality decisions about what’s appropriate for their companies," Ninneman says. The small companies his firm advises are looking into a range of options beyond the exchanges, he says, including self-funding their health plans or joining professional employer organizations so they can bring their costs down by being included in a larger pool of employees.
Entrepreneurs should keep an eye out for more health plan choices to emerge next year. For example, private insurance exchanges—which were traditionally offered only to large companies—are starting to reach out to small employers. Several brokerage firms, including Cambridge Consulting, plan to launch insurance exchanges specifically for small companies next year. Brokers, Kennedy explains, "can negotiate with carriers to get favorable provisions and to offer three or four plans to an employer group," Kennedy says. "Plus the technology for online enrollment has really improved. Private exchanges at the small-group level are going to work well."