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How the Small Business Health Care Tax Credit Works

        Money | Taxes

How the SHOP Marketplace Works

The Small Business Health Options Program (SHOP) marketplace was conceived as a virtual space where small-business owners could shop for, compare and buy health insurance plans for their employees. It opened in 2014, with some states running their own SHOPs and the federal government operating the rest. (As of July 2014, 17 states and the District of Columbia had state-based SHOPs, and the federal government was in charge of the other 33 states [source: Health Affairs].) The plan was to start off with a one-size-fits-all approach, with employers selecting one plan that would work for all of their employees. Then there would be a transition into an employee choice model, similar to the individual marketplace on Under employee choice, workers would be able to pick from a range of plans on the bronze, silver, gold and platinum levels, based on amount of coverage, premium costs and out-of-pocket expenses.

But that transition hit a few snags. In April 2013, well before the SHOPs opened, the Department of Health & Human Services announced that mandatory employee choice wouldn't start until 2015. And then in May 2014, that deadline got pushed to 2016. As of the end of 2014, all of the state-run SHOPs had already implemented employee choice. Fourteen of the federally run SHOPs were expected to offer it in 2015, with the rest joining in 2016 [source: Health Affairs].

Enrollment in the small business health care tax credit program and use of SHOP has been slower than expected at the start, with detractors saying that the employee and salary guidelines are too narrow and exclude many businesses that could benefit from the program. Insurers in some states have been slow to sign up, too, so employers don't have much of a choice when they're SHOPping. But things are expected to ramp up in 2016 when employee choice is finally mandatory across the board.

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