Dec 14, 2015, 6:04 PM, Posted by Katherine Hempstead
A new report shows that small business owners care about the health insurance coverage they offer their employees, yet the Small Business Health Option Program (SHOP) remains an untapped resource with the potential to help employers find affordable plans.
In 1942, Ken Wilson’s grandfather started Bonnie Brae Conoco, a full-service gas station and neighborhood garage in Denver. Today, Ken is the third generation to manage the business. They’ve offered their employees health insurance since 1970, paying 100 percent of the costs for those who work full-time. Although it’s their largest expense, the Wilsons believe offering coverage is essential. They want to take care of their employees and attract and retain the best people.
Small businesses, like all businesses, have struggled to keep up with the rising cost of health insurance. But unlike larger companies that can leverage their purchasing power to negotiate lower premiums and more comprehensive benefits, small businesses often have a choice of costlier plans with skimpier benefits. A recent study found small firms are far less likely than larger firms to offer health coverage. In 2012 and 2013, the percentage of small employers offering health insurance was 35 percent, while the percentage of large employers offering insurance was 95.8 percent.
The Affordable Care Act (ACA) has several implications for small businesses. Under the ACA, small business health plans are subject to the marketplace regulations similar to those in the individual market. Depending on the state in which the business is located and the characteristics of the work force, these changes could make premiums change a lot or a little. Many small businesses are still offering pre-ACA plans, and many of them will need to transition to ACA-compliant coverage in 2017.
One new opportunity is the Small Business Health Options Program or SHOP, which is an online marketplace where small business owners with 50 or fewer full-time employees can purchase health insurance for their workers. Features of SHOP attempt to provide flexibility for both employers and employees. Business owners can set their contribution and their employees can choose the plan and benefits they want. Small business owners with 25 or fewer full-time employees can also qualify for a tax credit to put toward the cost of coverage.