Small Business Health Options Program (SHOP)

On May 27, 2014, the Department of Health and Human Services (HHS) published a final rule taking the next step in implementing “employee choice” in the Small Business Health Options Program (SHOP).  “Employee choice” provides employers the opportunity to allow employees to choose any health plan at the actuarial value, or “metal,” level selected by the employer.

Small business markets differ from state-to-state.  To smooth the transition to employee choice, HHS provided states with additional flexibility by allowing State Insurance Commissioners to request that the SHOP in their state not implement employee choice in 2015.

Under the final rule, State Insurance Commissioners were given an opportunity to submit a written recommendation to the SHOP that employee choice not be implemented in that state in 2015 if the State Insurance Commissioner concluded that not implementing employee choice would be in the best interest of small group market consumers in his or her state.  This would be the case if the Commissioner determines that implementing employee choice would cause issuers to price products and plans higher in 2015 due to issuers’ beliefs about adverse selection.  This transitional policy applies to 2015, as HHS expects that states and issuers will be able to learn from the experiences of issuers in those SHOPs that have decided to implement employee choice in 2015 to prepare for 2016. HHS is committed to implementing employee choice in a way that learns from early experience and ensures its success.

Insurance Commissioners in states with a Federally-facilitated SHOP were required to submit their recommendation letters to HHS by June 2, 2014.  Below is a list of all states with a Federally-facilitated SHOP and provides information on whether each state will implement employee choice in 2015 or instead allow for transition relief.  In total, 18 states with a Federally-facilitated SHOP will allow for this transition relief in 2015. The remaining 14 states with a Federally-facilitated SHOP will join most State-based SHOPs and have employee choice available to small businesses in 2015, doubling the number of states offering this option.  In 2015, nearly two-thirds of Americans will live in states where small business workers can choose a health plan rather than have their employer do it for them.

For plan years beginning on or after January 1, 2016, all states will have employee choice available.

HHS Approval of State Recommendations to Not Implement Employee Choice in 2015:

Notes:

1. This is a one year not implemental policy and applies only for 2015. Employers in states not implementing to employee choice will be able to offer employees a single medical plan and a single dental plan.
2. The following FFM States will have the default policy of employee choice in 2015: Arkansas, Florida, Georgia, Indiana, Iowa, Missouri, Nebraska, North Dakota, Ohio, Tennessee, Texas, Virginia, Wisconsin, and Wyoming. Employers in these states may choose to offer employees either 1) all medical plans across a single metal level and all dental plans across a single coverage level, or 2) a single medical plan and a single dental plan.
3. Premium billing and payment services will be provided to all employers in FF-SHOPs—whether or not employee choice is available or chosen by an employer.
4. This list does not include SBM States. We will post SBM states defaulting to employee choice in 2015 as soon as all states have reported their decisions to us.