CMS Answers Key FF-SHOP Questions from Small Employers

Small businesses may participate in several federally facilitated Small Business Health Option Program (SHOP) exchanges – for example, if an employer has offices in different states – but each small employer is limited to establishing one FF-SHOP account per state.

If an employer has  worksites in several states, it may (1) establish an account in each state where the company has a primary work location for workers; or (2) it may establish an account in one state and use that to provide health insurance for all members of the group. If it does establish accounts in several states, it must submit a separate report on the participation rate to each FF-SHOP.

An employer is considered to be a small employer eligible for SHOP coverage if its average number of employees is 50 or fewer. Employers participating in the FF-SHOP must offer coverage to all full-time employees, defined as those working 30 or more hours per week on average.

The SHOP system is a way for employers to help satisfy health reform’s mandate for individuals to obtain coverage or pay extra taxes. Furthermore, most (34 out of 50, not including the District of Columbia) states will house (but not run) FF-SHOP exchanges.

In March 2013, the CMS released final rules that described the 70% participation requirement for small employers. Under those rules, insurers may deny coverage to small employers that fail to meet the minimum participation requirements.

Minimum Participation

Insurers may impose a 70% workforce participation requirement for small employers to partake in FF-SHOP coverage. In the first open enrollment period (Nov. 15 through Dec. 15, 2013), however, workers can obtain coverage on an interim basis even if an employer falls below the minimum participation amount, according to CMS. On renewal one year later, however, insurers will be able to invoke the participation requirement. State law may impose a different minimum participation requirement. Small employers are required to keep records of coverage held by workers to substantiate minimum participation and to ensure that workers do not have double coverage.

Other Highlights

Here are a few other policies small employers will want to know when considering group coverage with an FF-SHOP:

• The employer’s principal business address will determine premium rate factors, not the worker’s home address

   

• The FF-SHOP will not allow varying coverage for different classes of employees, whether they are owners, salaried or hourly

   

• The FF-SHOP exchanges will allow for coverage for retirees, but they must pay the same contribution rate as active employees

   

• COBRA enrollees are eligible and they are included in minimum participation rate calculations. Their premiums will be calculated based on health care reform’s allowed rating factors- age & tobacco use

   

• Insurers are responsible for making sure that Summary of Benefits and Coverage (SBCs) are given to small employer group plan sponsors and members

   

• If an employer group in the FF-SHOP allows coverage of domestic partners but an insurer on the exchange does not, then the domestic partner may be added as a dependent and the insurer would be expected to cover the partner as a dependent according to CMS

   

• Employers will be notified of the option to renew SHOP coverage 90 days before the end of the plan year. They have that time to decide whether to continue with existing coverage and help employees enroll or renew. If the employer elects to stay with the same “qualified health plan” employees can be automatically renewed into that plan.