Obamacare exempted small businesses (those with less than 50 FTE employees) from its Employer Mandate, but it did offer a way for such companies to purchase health coverage for its employees if it wanted to: SHOP, the Small Business Health Options Program. Using this federal exchange, a small business could purchase health insurance coverage for its employees (who, of course, faced the Individual Mandate) and sometimes receive a tax credit Problem is, it was largely a flop. SHOP enrollment just never took off. So on Monday, the Trump administration announced its plans to nix that part of the federal HealthCare.gov website.
If Trump’s proposal takes effect, after November 15, 2017, employees of small businesses will need to enroll in health plans by buying coverage directly from an insurance company or from a broker. The specifics of the impending change aren’t clear yet, but the basic idea is to narrow, but not eliminate, the federal website for small-business insurance so that companies could still go online to apply for government tax credits under the law but not purchase health plans directly from it. Healthcare.gov would instead show the names of available insurers and instruct individuals and companies to deal directly with them or brokers of the health plans. This change, say administration officials, would make it easier for small employers to offer a wider variety of plans to their employees while maintaining access to the Small Business Health Care Tax Credit, and reduce the burden on insurance companies, consumers, and American taxpayers.
Moving to end the ACA’s small-business enrollment system so quickly represents the first public step by Trump’s Health and Human Services Department to implement an executive order he signed his first night in office, directing agencies to ease regulatory burdens of Obamacare. Relatively few Americans will be directly affected by this particular change, but the symbolic gesture to do away with a failing Obamacare provision is there.
SHOP simply never remedied the major difficulty that most small employers face, and that is how to spread out the risk if an individual worker has high medical costs. SHOP enrollment fell far below projections -- the CBO had estimated that 4 million people would enroll in SHOP exchanges by 2017 but that enrollment stood at roughly 230,000 in January. Most small companies simply went without a healthcare option.
Will Trump’s plan be better? We’ll have to wait and see. But if you did purchase a plan for your employees using the SHOP exchange, begin talking to an insurance professional about your options, and be sure to communicate what changes will come to your employees’ coverage.
Please share your thoughts below on how this change will impact your business!