States Opt Out of SHOP Employee Choice in Droves

[Duaine]

Is the Small Business Health Options Program overpromising and under-delivering? Recent developments suggest that a growing number of states are proceeding with caution over a key provision that pinned high hopes on broader choices being offered to plan participants.

The Centers for Medicare and Medicaid Services is allowing insurance commissioners in states that are part of the federally facilitated marketplace to opt out of SHOP’s employee-choice provision for 2015 if they determine that it would produce adverse selection. So far, 18 states were given permission to do so.

The final rule also gives states broad authority to request a one-year delay in implementing employee choice options from the four standard metal tiers in the federal SHOP exchange. Several state-run exchanges are already considering postponing this function in 2015 on the heels of California’s decision to punt rather than play. Unless there’s a change in policy, all FFM states are expected to see employee choice implemented in 2016.

The message is clear, according to one industry insider. Various SHOP delays give the impression that the program represents “an afterthought and small businesses are low on the priority list” relative to individual-market exchanges, Kevin Kuhlman, an analyst with the National Federation of Independent Business, told Fox News.

The rationale for delaying employee choice is clearly based on what transpired during the first HIX open enrollment. Concern is mounting among the 32 states under the FFM umbrella about implementation of employee-choice functionality in the SHOP exchange when the government was unable to operate a simple employer-choice model in 2014, according to the National Association of Insurance Commissioners. The group notes that the employee-choice provision raises considerable challenges for the exchange and carriers, as well as employers and employees.

“Employee choice has been one of the principle justifications for having SHOP exchanges, and postponing it another year will in all likelihood impede enrollment growth for 2015,” Timothy Jost, a law professor at Washington and Lee University, recently wrote in the Health Affairs Blog. “On the other hand, the state decisions will give CMS another year to improve the functioning of the federal SHOP exchange and might strengthen it going forward.”

FFM states that will stick with a single health and dental plan option through the SHOP exchange and not offer the employee-choice provision in 2015 include Alabama, Alaska, Arizona, Delaware, Illinois, Kansas, Louisiana, Maine, Michigan, Montana, New Hampshire, New Jersey, North Carolina, Oklahoma, Pennsylvania, South Carolina, South Dakota, and West Virginia.

Employers in 14 states will have both options available to them during the upcoming HIX open-enrollment season. They include Arkansas, Florida, Georgia, Indiana, Iowa, Missouri, Nebraska, North Dakota, Ohio, Tennessee, Texas, Virginia, Wisconsin and Wyoming.


States Opt Out of SHOP Employee Choice in Droves - Health Insurance Exchange

 

[yorkriver1]

Anyone here writing SHOP plans? I want to think carefully before recommending that to a group.

Looking into self funded and higher deductibles/voluntary benefits with mainline carriers.

 

[kgmom219]

Anyone here writing SHOP plans? I want to think carefully before recommending that to a group.

Looking into self funded and higher deductibles/voluntary benefits with mainline carriers.

I didn't write any, but I did make sure my clients saw what the rules were to qualify. And if they were close on the income, I encouraged them to talk to their CPA. (Who invariably said "no!")

In Texas, right now only BCBSTX is writing SHOP. (What a surprise!) The plans were identical to the non-SHOP plans. For my clients that qualified, if was better to move them to the indy market, even with the tax break.

 

[RayNY]

I didn't, but as the resident broker that "knows the exchange", I assisted an associate enroll a group or two (existing clients of hers that were more than happy to claim their free money, whatever it took).

Moral of the story, it was 20 times the work just to save them less than a single individual worth of premium. We worked for free, but I'm sure the extra hours their CPA put in totally negated the subsidy.

For the low income companies, it was better to just drop coverage and send the EE's to the indiv exchange (possibly with a pay bump). For high income companies, they just stayed with group.

 

[Post Quartermaster]

Keep in mind that the tax credit is not the only potential reason to enroll in the SHOP.

If a group enrolls during the SHOP open enrollment, carriers cannot enforce participation requirements in the 1st 12 months:

• In many states, at least 70% of your full-time employees must enroll in your SHOP plan. (Employers who apply for SHOP coverage between November 15 and December 15 each year can enroll without meeting this requirement.)

 

[AllenChicago]

When I considered SHOP certification, one of these periodic FAQ e-mails would come in from CMS and I'd change my mind... Even simple questions have complex answers when the Feds are involved. -ac

FAQ ID: 6987 Publish Date: 11/06/2014

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Question:
In the case of a small employer that purchases a Qualified Health Plan (QHP) through a Small Business Health Options Program (SHOP) for a plan year that is not the calendar year, will the QHP be certified through the duration of the employer's 12-month plan year?

Answer:
Under 45 CFR 155.725(b), the SHOP must permit a qualified employer to purchase coverage for its small group at any point during the year. The employer's plan year must consist of the 12-month period beginning with the qualified employer's effective date of coverage. This means that for groups enrolled in a QHP through the SHOP, the employer's plan year might not coincide with the calendar year. However, in the case of a QHP that is certified on the basis of a calendar year, the certification expires at the end of the applicable calendar year and will not apply to the portion of the employer's plan year that extends into the following calendar year.

We recognize that having a health plan lose or change its certification mid-plan year may create undue burden on issuers, employers, and employees alike. It could also affect a small employer's eligibility for the tax credit under section 45R of the Internal Revenue Code. To address these concerns, we intend to propose in future rulemaking that, if a SHOP certifies QHPs on a calendar year basis, the certification will remain in effect through the duration of the qualified employer's 12-consecutive-month plan year that began in the calendar year with respect to which the plan was certified.

Pending rulemaking on this topic, the Federally-facilitated SHOP will treat a QHP certified with respect to a calendar year and purchased by a small employer as having in effect such certification through the duration of the qualified employer's 12-consecutive-month plan year. State-based SHOPs are encouraged to adopt similar treatment. The Department of the Treasury and the Internal Revenue Service have advised CMS that they would consider coverage that is subject to this guidance to be coverage in a QHP offered through a SHOP through the duration of the qualified employer's plan year for purposes of determining the employer's eligibility for the section 45R credit.

---------snip-------

 

[Ann H]

Keep in mind that the tax credit is not the only potential reason to enroll in the SHOP.

If a group enrolls during the SHOP open enrollment, carriers cannot enforce participation requirements in the 1st 12 months:

• In many states, at least 70% of your full-time employees must enroll in your SHOP plan. (Employers who apply for SHOP coverage between November 15 and December 15 each year can enroll without meeting this requirement.)

I believe that 11/15 to 12/15 special enrollment period applies to non-shop group coverage too. At least here in AZ all carriers are offering it off-exchange too.