Entrepreneurs in Delaware, Illinois, New Jersey, Ohio and Missouri will be the first to be able to sign up to offer health care plans to their employees through the federal government beginning in late October.
This is a win for small businesses, which aren’t legally required to provide health insurance, but will presumably be able to attract more competitive talent by offering this valuable perk.
It’s called the Small Business Health Options Program, or SHOP, and it’s part of the Affordable Care Act, which the Obama administration passed in 2010 and launched last year. Similar to the Health Insurance Marketplace, an online portal that lets individuals shop around for medical coverage, SHOP is an online marketplace that will let employers with fewer than 50 full-time employees offer four different coverage plans to their workers.
To avoid the chaos that surrounded the launch of the individual online health care marketplace last fall, which included website crashes and technical glitches, SHOP is being launched first in just five states through an early access program sponsored by the Centers for Medicare and Medicaid Services (CMS). Businesses nationwide can get in on the action beginning Nov. 15, and coverage will start as early as Jan. 1, 2015.
“The SHOP early access initiative is also designed to build confidence in the online SHOP Marketplace when it opens to small employers nationwide,” said Rhett Buttle, director of private sector engagement for the U.S. Department of Health and Human Services, in a blog post last month. “SHOP Early Access in these five states embodies this spirit of learning and will allow CMS to collect valuable information that will inform the full launch of the SHOP Marketplace in November.”
To get started, small business owners create an account on HeathCare.gov, fill out an application and upload their employee roster. Businesses in the early access states can complete these steps beginning in late October, but can’t begin comparing plans and prices until the portal fully launches in November. The four plans — Bronze, Silver, Gold and Platinum — all cover basic benefits including doctor visits and prescription drugs, but deductible and co-payment amounts differ.
Additionally, employers with fewer than 25 employees can qualify for a tax credit that covers up to 50% of their premium costs. Self-employed entrepreneurs can get coverage through the government’s individual health insurance portal.
For more information about SHOP, check out NerdWallet’s guide.
Health care illustration via Shutterstock.