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National Restaurant Association - Small business insurance exchanges to open Oct. 1

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Small business insurance exchanges to open Oct. 1

Small Business Health Options Programs, also known as SHOP exchanges, are scheduled to open in every state on Oct. 1. Creation of the exchanges, which will give small employers who want to offer health coverage to employees a single point at which to compare and purchase plans, was mandated by the 2010 health care law.

How prepared the SHOP exchanges will be by Oct. 1 varies by state, according to a Government Accountability Office report released in June. The report said states and the U.S. Department of Health and Human Services have made “much progress…but much remains to be accomplished.”

The U.S. Department of Health and Human Services, in its response to the report, expressed confidence that exchanges would be open and functioning in every state on Oct. 1. The federal government will run SHOP exchanges in 33 states, with the remaining states operating their own exchanges. The Kaiser Family Foundation has compiled profiles of each state’s exchange, including contact information.

SHOP exchanges in 2014 will serve a market of small employers, generally those with fewer than 50 employees. SHOP exchanges will be required to sell group plans to businesses with up to 100 employees starting in 2016.

The law initially required SHOP exchanges to let small employers sign up for a range of plans that employees could choose from. But this spring HHS announced that federally run exchanges will restrict employers to offering just a single plan to their employees in the first year. State-run exchanges have the option of allowing employers to choose a single plan or multiple options. Plans are classified as “platinum,” “gold,” “silver” or “bronze,” depending on their level of coverage, and all plans purchased through SHOP exchanges must cover 10 services. Those are

  • Ambulatory patient services
  • Emergency services
  • Hospitalization
  • Maternity and newborn care
  • Mental health and substance use disorders
  • Prescription drugs
  • Rehabilitative services
  • Lab services
  • Prevention and wellness services
  • Pediatric services, including oral and vision care

Some states require that a certain percentage of a business’s employees participate in order for the employer to buy insurance through the exchange. Certain small employers who purchase coverage through a SHOP exchange will be eligible for a tax credit of up to 35% to offset the cost of insurance. To qualify, businesses must have 25 or fewer employees, pay employees an average annual wage of less than $50,000, offer coverage to all full-time employees, and pay at least 50 percent of the health care plan premium.

SHOP exchanges in various states have begun reaching out to employers about their options.

“We’ve had a lot of restaurant owners and proprietors come to the meetings,” said CJ Bawden, communications officer for the Silver State Health Exchange in Nevada.  “Most of the questions revolve around misinformation about the Affordable Care Act.” For example, many smaller businesses—defined under the law as those with fewer than 50 full-time-equivalent employees—still are under the impression that they will face penalties in 2015 if they fail to offer coverage to employees, Bawden said.  

The Colorado SHOP exchange, Connect for Health Colorado, has been holding meetings with businesses across the state, said Jim Sugden, small business marketplace manager for the exchange. “We’re talking to a whole range of business owners,” he said. Questions tend to focus on the criteria for purchasing coverage through the exchange and how the small business tax credit works, Sugden said.

“We’re talking to a lot of Colorado brokers who have worked with restaurants about how they can educate employees … about coverage,” Sugden said.

Pete Meersman, CEO of the Colorado Restaurant Association, said the CRA had held meetings with Connect for Health Colorado and is working to educate and inform restaurateurs in the state about their responsibilities and options under the health care law. Several CRA staff members specialize in insurance, he said. “We’ve communicated to our members the availability of the exchange,” Meersman said. “We’re going to educate our members, advocate for them, and work with Connect for Health Colorado to stay on top of the continued development there. Our objective is to help our members achieve compliance with the [health care law].”

Download the NRA’s Health Care Law Primer for in-depth information on insurance exchanges and other aspects of the law.

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