Q: Can small businesses use the ACA’s health insurance marketplaces (exchanges)?
A: Yes. In every state, the marketplace includes both individual and small business health plans. The small business section of the marketplace is called the Small Business Health Options Program (SHOP). If your business qualifies for a small business health care tax credit, the credits are only available for plans purchased through the SHOP marketplace.
The SHOP marketplaces were originally open to businesses with up to 50 employees, but that was scheduled to change in 2016, with availability being extended to groups with up to 100 employees.
However, the PACE Act, which was signed into law in October 2015, kept the definition of “small group” at 50 or fewer employees. That meant that the SHOP exchanges would not open up to businesses with 51 to 100 employees as of January 2016. But there are four states that changed their laws to match the original intent of the ACA. So SHOP marketplaces in Vermont, New York, Colorado, and California are open to businesses with up to 100 employees.
Enrollment in SHOP plans can be done throughout the year (unlike individual health insurance, which is only be available during open enrollment or following a qualifying event), so states that are running their own SHOP marketplaces have the option to delay the initial enrollment if necessary.
Employers using the SHOP marketplace can designate how much they will contribute towards their employees’ coverage and then each employee can select from a range of plan options. This is known as “employee choice” and although it was delayed in 2015 in some states, it’s universally available in 2016, as long as there are multiple carriers and plan options in the SHOP marketplace (as an example of where this would only work in theory – but not in practice – Washington state’s SHOP marketplace in 2017 will only have Kaiser as a participating carrier, and even Kaiser will only offer SHOP plans in two counties in the state)