Small business health options program 2023: Should your startup offer health insurance?
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The new Small Business Health Options Program (SHOP) will offer health insurance to small businesses and their employees starting in 2023. But is this right for your startup? Here’s a look at the pros and cons of offering health insurance through SHOP.
What is the Small Business Health Options Program (SHOP)?
The Small Business Health Options Program (SHOP) is a government program created in 2014 as part of the Affordable Care Act. Through SHOP, small businesses and certain nonprofits can offer health insurance to their employees. An important feature of the program is that employers have a choice of different plans from different insurance companies on their SHOP Marketplace.
This means that employers and employees can compare plan characteristics such as coverage levels, price, quality ratings, and provider networks, giving Premium Tax Credits/subsidies where applicable. Ultimately, SHOP allows businesses with 1-50 full-time equivalent employees to purchase comprehensive, cost-effective coverage for their employee’s health needs and budgets.
Who is eligible for SHOP coverage?
The Small Business Health Options Program (SHOP) offers coverage to small businesses and tax-exempt organisations with 1–50 employees. Each employee must work for at least 90 days throughout the year, although employers can choose to cover any combination of full-time and part-time employees.
In addition, businesses or organisations currently enrolled in SHOP can keep their coverage until it expires – even if their number of qualified employees falls below 1–50 during that period. The employees themselves are eligible for coverage when they meet certain criteria, including working an average of 30 hours or more per week for the majority of the plan year.
What are the benefits of offering health insurance through SHOP?
The Small Business Health Options Program (SHOP) provides employers with an efficient and cost-effective way to offer health insurance coverage to their employees. Employers can choose from a selection of plans offered by multiple insurers, access free expert assistance for questions about choosing a plan, receive tax credits for eligible small businesses that cover at least 50% of the cost of health insurance premiums, and provide stable, quality coverage with fixed costs per month that won’t change from one year to the next.
SHOP helps employers save time, money, and resources while also providing their employees with access to quality health insurance plans that could be difficult to find on the individual market.
How do I get started with offering health insurance through SHOP?
Getting started with health insurance for your small business can easily be done online or by phone. Through the SHOP online marketplace, you can compare online quotes from multiple health insurers and determine which one offers the best coverage for your budget. You can also access help in selecting the right plan and enrolling online if needed. Once you’ve identified and selected a plan, you’ll have to pay any applicable fees to keep the plan active through SHOP. Before enrolling, it’s important to review each plan carefully as well as understand any coverage limits associated with the plan itself. Getting started with health insurance through SHOP gives employers more choices in providing quality benefits to employees while controlling costs.
Are there any drawbacks to offering health insurance through SHOP?
Small business owners must assess the cost-benefit ratio when considering offering health insurance through the Small Business Health Options Program (SHOP). Though SHOP allows employers to access plans with more competitive pricing, increased choice, and greater bargaining power, there are drawbacks as well.
SHOP plans tend to offer fewer coverage options compared to individual market plans and can limit employees in their provider networks. Further, SHOP requires businesses to be able to contribute at least 50% of employee premiums or face a penalty from the IRS. Ultimately, deciding whether or not to offer health insurance through SHOP is a complex judgement call for employers.
Bottom line: should your startup offer health insurance through SHOP in 2023 and beyond?
While there are several benefits to offering health insurance through SHOP as a startup, there are also some drawbacks to consider. An employer-sponsored plan can increase employee satisfaction and loyalty, while providing employees with the coverage they may not be able to access outside of the workplace. However, startup employers must pay more than half of their employees’ premiums and meet minimum participation requirements which could be challenging for younger startups with small budgets.
Additionally, offering an employer-sponsored plan may impact startup eligibility for certain tax credits if one were already qualified for them. Ultimately, evaluating a startup’s budget and resources along with their particular needs is the best way of determining whether or not offering health insurance through SHOP is the right choice in 2023 and beyond.
The Small Business Health Options Program (SHOP) is a health insurance marketplace created by the Affordable Care Act. SHOP offers small businesses and startups the opportunity to provide quality, affordable healthcare coverage for their employees. While there are some drawbacks to offering health insurance through SHOP, on balance it is a good option for companies who want to attract and retain quality employees.
If you’re still not sure whether or not your company should offer health insurance through SHOP in 2023 and beyond, our team of experts may help you make the best decision for your business.
