The Small Employer Health Options Program (SHOP) will open Jan. 1 across Washington state for the first time.  

SHOP is the small-business version of the Washington Health Benefit Exchange, through which individuals can go online to buy health insurance, and it will be referred to as the Washington Healthplanfinder Business. The Affordable Care Act (ACA) required each state to offer an exchange for individuals and a SHOP for small businesses with up to 50 employees.  

Clark and Cowlitz counties offered SHOP coverage in 2014 through Kaiser Foundation Health Plan of Northwest. Other carriers contended they didn’t have the resources to participate; therefore it was delayed in most counties until 2015.  

“We’re thrilled to bring another health insurance option to small businesses statewide this year,” says Catherine Bailey, director of Washington Healthplanfinder Business. “Through Washington Healthplanfinder Business, small businesses with up to 50 employees can compare plans, decide their contribution level and manage payment—all in one place.”

Moda Health, an Oregon-based company, will enter SHOP as the lone carrier across the state for 2015. Moda has a contract with the First Choice Health and Oregon Dental Service Plus networks.  Moda has been in the state since about 2012 through a partnership with Spokane-based employer association Associated Industries.   

There are some rules to participate in SHOP. Groups must have less than 50 employees located in Washington state or have employees operating a primary worksite in the state. They also will need to offer coverage to all full-time employees and meet the minimum participation guidelines.  

ACA subsidies won’t be available to employer groups that elect SHOP coverage as opposed to individuals who purchase coverage through the exchange. Subsidies are awarded to those applicants who financially qualify. Dependents also won’t be eligible for subsidy through SHOP.     

Perhaps the biggest change in the 2015 marketplace will come in the form of what is called an employee-only contract.  Small group employers will be allowed to offer medical benefits just to their employees, with dependents excluded. Employee-only contracts previously have been made available to large groups but not in the small group marketplace.

The advantage of this contract is that spouses and their children now will be eligible for subsidy from the exchange. Contracts that offer coverage to both employees and their dependents prohibit them from receiving a subsidy. Even unaffordable dependent coverage in the eyes of the employee is still considered an “implicit” offer of coverage, therefore removing any potential subsidy. Children may be eligible for Washington Apple Health, a Medicaid program. 

The possible disadvantage to an employee-only contract is that high earners typically are the ones who cover their entire family, and these are the most competitive employees for employers to retain. An employer will need to consider carefully how their group could be impacted before making a change to this type of contract.  

Moda will offer both types of contracts in SHOP and in the private market. Please remember that every product offered on the exchange or SHOP must be offered in the private market as well. Other insurance carriers may offer an employee-only contract pending approval from the Office of the Insurance Commissioner.

If you are a small business owner, you may be asking yourself, ‘Why would I go through SHOP to purchase coverage?’  It’s simple: tax credits. Only businesses with health insurance coverage through SHOP will be able to apply for the small business tax credit in 2015. The credit may be worth up to 50 percent of your premium contribution.    

In general, the tax credits are available to employers with fewer than 25 full-time employees and that contribute at least 50 percent of the employee premium. The average wages for the employees must be less than $50,000 per year.

There will be some hoops to jump through to get coverage placed in SHOP. Employers will need to create an account on the Washington Healthplanfinder website. Then they will need to enter their company information, input their employee roster, select a plan or metal level (see my explanation of that later), enter their proposed contribution, and notify employees that they are now able to log in online to complete their portion of enrollment.  

Next, employees will need to log in to the Washingtonhealthplanfinder.com website and create their accounts. As part of that process, they will need to verify household information such as address, tobacco habits, and income.  They will need to elect a plan (if given that option) and complete the process with an e-sign. If you would like to see the entire proposed enrollment process, please visit the Fidelity Associates website and click on ‘Blog’.

Fortunately, quotes were to be available beginning Oct. 17, prior to the enrollment process, so employers can evaluate whether this is a viable solution for their group.  Employers who elect to purchase coverage through SHOP will be given the option of choosing one plan or electing a level of coverage such as bronze, silver, gold or platinum.  The level of coverage option is referred to as the “employee choice model.”   

If a group decides to go with the employee choice model, it will need to let employees know how much they will have to contribute toward coverage.  The minimum contribution is 50 percent per employee.  The employees will then go shopping online to select the best plan for them, understanding that they have ‘x’ amount of money to spend and that the remainder will have come out of their wallets. 

Employees who have coverage through a spouse or parent may still waive coverage through their employer.  Those who are Medicaid eligible are also considered an “eligible” waiver that doesn’t count against the group’s participation guidelines. Please remind your employees to determine whether their dependents are Medicaid eligible.  

Katy Durning is a Spokane-based employee benefits consultant for Fidelity Associates. She can be reached at [email protected].