Can small businesses use the ACA’s health insurance marketplaces (exchanges)?

Q: Can small businesses use the ACA’s health insurance marketplaces (exchanges)?

A: In most states, not anymore. But some state-run exchanges still have a platform where small businesses can compare plans and enroll in coverage for their employees. Originally, that was an option in every state, but in the 39 states that use HealthCare.gov, the availability of small business plans in the exchange changed in 2018.

Instead of having small businesses use the exchange to enroll in coverage, HealthCare.gov now directs them to seek out a broker or contact an insurance company directly. And although the site still maintains a tool where employers can check to see if there are SHOP plans available in their area (for purchase directly from an insurer or with the help of a broker), the tool no longer shows any available plans.

The Small Business Health Options Program (SHOP) never really took off. As of 2017, HHS reported that there were fewer than 39,000 people enrolled in SHOP coverage across the 26 states with fully federally-run SHOP platforms. Hawaii was the first state to obtain approval for a 1332 waiver, and its purpose was to eliminate the state’s SHOP exchange as of 2017. Arkansas used to run its own SHOP platform (although the state used HealthCare.gov for individual market enrollments), but announced in 2017 that there would no longer be a SHOP option because insurers were no longer participating in SHOP in Arkansas. Mississippi also ran its own SHOP platform (but used HealthCare.gov for individual market enrollments), but stopped accepting enrollments at the end of 2017.

But enrollment in SHOP coverage in some of the state-run exchanges has been fairly brisk (although in most cases, far lower than enrollment in individual market plans). Covered California’s SHOP exchange had 47,000 members as of 2018. And DC’s SHOP exchange had more than 77,000 members as of 2018, although that’s driven in large part by the fact that all small group plans in DC must be purchased through the exchange, and members of Congress also obtain their coverage through the DC SHOP exchange.

If your business qualifies for a small business health care tax credit, the credits are only available for plans purchased through the SHOP marketplace. But again, even the tax credit was not a significant draw when SHOP plans were available via HealthCare.gov, as very few small businesses used the platform (the tax credit is only available for up to two years, so a small business cannot count on it for long-term support).

The SHOP marketplaces were originally open to businesses with up to 50 employees, but that was scheduled to change in 2016, with availability being extended to groups with up to 100 employees. However, the PACE Act, which was signed into law in October 2015, kept the definition of “small group” at 50 or fewer employees. But there are four states that changed their laws to match the original intent of the ACA. So SHOP marketplaces in Vermont, New York, Colorado, and California are open to businesses with up to 100 employees. All four of those states run their own exchange platforms; they do not use HealthCare.gov.

Enrollment in small business health plans can be done throughout the year (unlike individual health insurance, which is only available during open enrollment or following a qualifying event).

The following states still have SHOP platforms for small businesses:

  • California
  • Colorado
  • Connecticut
  • District of Columbia
  • Idaho
  • Maryland
  • Massachusetts
  • Minnesota
  • Mississippi (uses HealthCare.gov for individual enrollments, but has its own SHOP platform)
  • New Mexico (uses HealthCare.gov for individual enrollments, but has its own SHOP platform)
  • New York
  • Rhode Island
  • Vermont
  • Washington

Source: health insurance