A health reform requirement that all insurers offer four levels of health coverage to small businesses will be delayed until 2015. Under a final rule from HHS (to be officially published June 4), many small employers will have fewer plans to choose from the Small Business Health Options (SHOP) program in 2014.
Background
Starting in 2014, small businesses with up to 100 employees will have access to state-based health insurance exchanges (also known as marketplaces). Insurers selling on the exchanges must provide four levels of coverage, connected to actuarial value: bronze (60 percent AV), silver (70 percent), gold (80 percent) and platinum (90 percent). Providing the four levels of coverage — bronze, silver, gold or platinum — is a required SHOP function.
Delaying that requirement until 2015 would provide stability to the small-group insurance market as insurers gain their footing in SHOP marketplace, HHS said in the rule.
Employers with plan years starting before Jan. 1, 2015 may have just one choice of coverage (per insurer), but starting Jan. 1, 2015, insurers will have to start offering all four coverage options on the SHOP.
The final rule incorporated comments received on, and finalizes guidance from, these proposed rules:
- a March 27, 2012, final rule (77 Fed. Reg 18310);
- a March 11, 2013 rule on Notice of Benefit and Payment Parameters (78 Fed. Reg 15410); and
- a separate March 11, 2013 proposed rule on qualified health plans and exchanges (78 Fed Reg 15553).
The final rule also requires that if an insurer offers coverage on the main exchange for individuals, but also has 20 percent or greater share of that state’s small group market, it must offer gold and silver coverage on the SHOP exchange.
The rule also states that if an insurer with 20 percent or more of the small-group market fails to offer policies on the SHOP, it will lose the opportunity to sell on the mainstream health insurance exchanges.
Insurers that do not offer small group market products in a state will not have to offer the required SHOP coverage as a condition for selling on the larger exchange.
HHS also changed the SHOP special enrollment period from 60 days to 30 days after a qualifying event to align health reform’s special enrollment rules with those in the Health Insurance Portability and Accountability Act of 1996.
Availability of SHOP coverage is limited by statute to employers with 100 or fewer employees. In 2016, states will have the option to reduce this threshold to 50.
For more information on emerging health reform rules, see The New Health Reform Law: What Employers Need to Know and the Employer’s Guide to Self-Insuring Health Benefits.