A reform requirement that all insurers must offer four levels of health coverage to small businesses would be delayed until 2015 under proposed rules scheduled to be published March 11 in the Federal Register. Under the U.S. Department of Health and Human Services proposal, small employers may get one choice of health coverage in 2014.
Starting in 2014, small businesses with up to 100 employees will have access to state-based health insurance exchanges under the Small Business Health Options Program. The levels of coverage are connected to actuarial value: bronze (60 percent), silver (70 percent), gold (80 percent) and platinum (90 percent).
Employers can choose the level of coverage they want for their employees but SHOP plans would get a grace period for the year ending Jan. 1, 2015, during which they could offer just one coverage option.
Special Enrollment
HHS said that delaying the requirement until 2015 would give the insurance market time to adjust, foster competition among SHOP plans and allow small businesses to take part in insuring their workers (with some using federal insurance subsidies).
The new SHOP proposal also provides the following rules on special enrollment periods.
- Special enrollment periods in the SHOP are within 30 days of the triggering event. These special events are: (a) loss of eligibility for other private insurance coverage; or (b) a person becoming a dependent through marriage, birth or adoption. It does so to align SHOP rules with the length of special enrollment periods in group markets with existing HIPAA rules.
- If an employee or dependent becomes eligible for premium assistance under Medicaid or the Children’s Health Insurance Program or loses eligibility for Medicaid or CHIP, this would be a triggering event, and the employee or dependent would have a 60-day special enrollment period to select a qualified health plan.
Background
HHS said in the proposed rule that because of poor economies of scale, small businesses pay higher premiums and administrative costs per covered life than large businesses. Also, they are at a disadvantage in negotiating with insurance companies because they lack bargaining power. The SHOP exchanges are designed to remedy these disadvantages, according to HHS. The agency said premiums for SHOP coverage will be cheaper by 4 percent for small businesses.
SHOP exchanges will include web portals to help small businesses shop for coverage.
More businesses will be eligible for SHOP starting in 2017 — then, businesses with more than 100 employees can buy SHOP coverage.
For more information on the small business subsidies and the SHOP see Section 810 of The Health Reform Law: What Employers Need to Know, from Thompson Information Services.