The troubled rollout of the Affordable Care Acts federally facilitated Small Business Health Options Program, or SHOP exchange, has hit another snag as more than a dozen states will delay offering employee choice in 2015.
The U.S. Centers for Medicare and Medicaid Services said June 10 it has granted requests for lenience from 18 states in their effort to enact employee choice, which provides employers the opportunity to allow employees to choose any health plan at the actuarial value, or metal level, selected by the employer.
According to CMS, state insurance commissioners in states using the Healthcare.gov infrastructure were given an opportunity to submit a written request that employee choice not be implemented on that states SHOP in 2015 if the commissioner determined that implementing it would cause insurers to price products and plans higher in 2015 due to adverse selection.
Some advisers already overwhelmed adjusting to new rules and requirements under the employer mandate may welcome the delay, but others also say it negates the largest incentive employers have to enroll in SHOP.
See related: SHOP is a flop for brokers across the nation
I thought the main reason for the creation of the SHOP was to give employees choice within their employer plan. Now the only reason you would choose a SHOP plan would be to get a tax credit, says Ronnell Nolan, president and CEO of the Baton Rouge, La.-based Health Agents for America. In order to get a tax credit, you must exclude family members and if you look at the tax credit chart, the advantage seems to be minimal. The salaries must be really low to take full advantage.
Nolan says shes urging advisers to consult with certified public accountants (CPA) and run quotes with small employers considering either switching to the SHOP plan or sticking with a single medical plan.
Making the decision to use a SHOP product only for the benefit of a tax credit, may or may not be advantageous to that clients bottom-line, Nolan says, adding this is especially true if the employer would be losing grandfather status for its current medical plan.
CMS says the employee choice delay applies only for 2015 and the U.S. Department of Health and Human Services CMS parent agency expects that states and insurers will be able to learn from the experiences of issuers in those SHOPs that have decided to implement employee choice in 2015 to prepare for 2016.
The states that will not offer employee choice in 2015 are Alabama, Alaska, Arizona, Delaware, Illinois, Kansas, Louisiana, Maine, Michigan, Montana, New Hampshire, New Jersey, North Carolina, Oklahoma, Pennsylvania, South Carolina, South Dakota and West Virginia.
The federal SHOP exchange implementation has been plagued with setbacks. The online enrollment component for the SHOP exchange has twice been delayed, first until sometime in November 2013 and then, on Nov. 27, 2013, HHS announced that online enrollment for the roughly 37 states with a federally run SHOP exchange would be delayed again until November 2014 when open enrollment for the 2015 plan year commences.
The agency confirmed recently that the enrollment website will be online later this year.
See related story: Online SHOP enrollment expected to be operational for advisers this year
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