America's small business owners were supposed to get more choices and cheaper rates from the new online health insurance portals.
But according to The Wall Street Journal, most small business owners are snubbing the Small Business Health Options Program (SHOP), saying the limited federal tax credits and a small menu of insurance offerings makes it a "non-starter."
Since last November 15th, small businesses in 33 states have been able to buy coverage for their employees through HealthCare.gov, the Affordable Care Act’s online insurance enrollment site. Seventeen other states as well as the District of Columbia chose to operate their own SHOP marketplaces.
Who Can SHOP
In order to use the SHOP Marketplace to offer coverage to employees, businesses must have 50 or fewer full-time equivalent (FTE) employees and the business must offer coverage to all of the full-time employees. Generally this means those working 30 or more hours per week on average. You don’t have to offer coverage to your part-time employees – generally those who work 29 hours per week or fewer.
You may also qualify for employer health care tax credits if you have fewer than 25 full-time equivalent employees making an average of about $50,000 a year or less.
Insurance broker Emily Bremer of St. Louis told the WSJ she had several clients that qualified for the tax credits but they “said it was so much work for so little money that it wasn’t worth it.”
One of the companies, which employed fewer than 10 workers with an average salary of about $25,000, received an annual $1,400 tax credit.
“We have not had one employer sign up through SHOP in our office, and I’ve been hard-pressed to find an agency that has,” she continued, adding that she believes small firms in her state are underwhelmed not only by the limited tax credits, but also by the limited variety of options available on the exchange.
"The tax credit for small business owners is a joke," says Olin Davis, a Delaware-based tax preparer. "Almost no one qualifies. I am a CPA who has about 100 small clients who could have been possibly qualified for the credit over the last several years. Of those, only one employer qualified. The total premiums paid for the year were in excess of $ 80,000. The credit was a whopping $288. The people who write these laws have no clue what small business is like."
The federal government has yet to release figures for SHOP participation in states with federally-facilitated marketplaces.
According to Katie Hill, the national press secretary for the U.S. Department of Health and Human Services, “the SHOP Marketplace is performing well.” She told the WSJ that “call volume is up at our SHOP call center, and small-business owners are completing applications and shopping for coverage.”
She also said the government expects SHOP participation will grow in time, "as small businesses and employees have a quality experience and access more health care options.”
According to the latest figures available from the U.S. Government Accountability Office, an estimated 12,000 small employers had purchased plans through the state-operated SHOP exchanges.
The GAO says the sign-ups are “significantly lower than expected,” citing technical challenges, limited awareness, shortcomings of the tax credit and delays in key features as factors for the small enrollment.
In a survey of 900 small-business owners sponsored by the National Federation of Independent Business, a Washington lobbying group that led a failed lawsuit against the Affordable Care Act, only 4% said they had visited the HealthCare.gov site in the past year specifically to look for business coverage. Another 65% had not visited the site at all.
In the comments section of the WSJ article, Rick Lindquist, president of small business health insurance solution provider Zane Benefits, and co-Author of The End of Employer-Provided Health Insurance, had this to say.
"These SHOP exchanges were doomed to fail from the beginning. The entire idea of SHOP runs on the same model as traditional employer-provided health insurance, which means no portability, limited choice and minimum participation and/or contribution requirements. The way to think about a SHOP exchange is as a group health insurance plan with a few more options. It is financially better for the owners and employees to go to the Individual exchanges and receive defined contributions from the business. Why? Portability. Choice. Tax Credits. Lower Cost."