New plan allows employees to ‘SHOP’ for health insurance

Instead of choosing a single health care plan for employees, imagine offering them a wide variety of plan options from various insurance companies.

“Employee Choice,” a new feature of the Affordable Care Act’s Small Business Health Options Program (SHOP) Marketplace, will now afford that opportunity. Wisconsin is one of 14 states offering Employee Choice in 2015.

Beginning Saturday, Nov. 15, employers with 50 or fewer full-time equivalent employees can choose to offer Employee Choice when they apply for SHOP coverage online. In the meantime, they can find out if they qualify for SHOP and preview 2015 SHOP plans and estimated prices by visiting www.healthcare.gov/small-businesses.

“There’s been a push toward giving employees more choices when it comes to health insurance,” said Sarah Fowles, an employee benefits attorney at Milwaukee-based Quarles & Brady LLP, of the reason for Employee Choice. “Some employees, for example, might be comfortable with a higher deductible, and others might want a lower deductible option in exchange for paying a higher premium.”

The way Employee Choice works is that it allows employers to select a plan category (Bronze, Silver, Gold or Platinum) to offer to employees. Employees can then choose any plan in the selected category from any insurance company participating in SHOP in their area.

An employer is obligated to pay 50 percent of the employee’s premium for the tier the employer selects, according to Ralph Bultman of Brookfield-based Bultman Financial Services Inc. He also said an employer is not obligated to pay any of the premiums for spouses or children.

The array of choices will vary based on location and the number of insurers who participate in the SHOP Marketplace, according to Fowles. Thus, employers might be able to offer anywhere from two to 20 options through Employee Choice.

The number of options for a company will be identified once the employer fills out an application, but it is likely Wisconsin companies may have a good amount of options as Fowles said the state has a robust insurance market. That said, there are more insurers providing coverage in Milwaukee County than in remote areas of the state.

After employers submit their applications, they will also learn exactly how much they will pay for any plan they choose.

Fowles noted that it would be advantageous for employers to apply for SHOP coverage between Saturday (Nov. 15) and Monday, Dec. 15. Ordinarily, 70 percent of employees who are offered coverage must enroll in a plan in order for a company to participate in SHOP, but that minimum participation requirement is waived if an employer applies in that month time period.

“That requirement can be difficult for some employers,” she said. “To get 70 percent of employees to sign up, employers have to contribute more. That can be a real sticking point for small employers, and that’s why many don’t offer insurance.”

Although the 70 percent requirement would be enforced, employers can apply for SHOP coverage anytime throughout the year. There is no restricted enrollment period like there is in the Individual Marketplace.

Another benefit to SHOP, according to Fowles, is that some employers may be eligible for the Small Business Health Care Tax Credit, which she said reduces the cost of premiums up to 50 percent depending on the type of employer and size of the business.

Employee Choice does, however, have a few drawbacks, she said.

For one, private employers are required by the Employee Retirement Income Security Act to provide employees with numerous disclosures about their health coverage.

“If you have a bunch of employees enrolled in different plans by different insurers, the disclosure obligations get really complex and could get confusing from the employer’s perspective,” Fowles said. “When there’s one insurer, it’s easier to manage the flow of information.”

Currently, employers work with insurance brokers who in turn work with insurers, but she said another potential downside of Employee Choice is that it adds the fourth entity of SHOP.

“When you add another person or entity to the mix it just ups the possibility that mistakes can be made,” she said.

To learn more about SHOP and Employee Choice, visit www.healthcare.gov or talk to your insurance broker.

Hilary Dickinson is a staff reporter at BizTimes Milwaukee.

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