The SHOP Marketplace New Health Insurance Options for Small Businesses Roseanne Egan Deputy Regional Administrator August 2013

The Marketplace (or Exchange) – Place for qualified individuals and employers to directly compare private health insurance options Known as Qualified Health Plans (QHPs) – Can directly compare on the basis of price, benefits, quality, and other factors Introduction to the Marketplace

1. It’s an easier way to shop for health coverage – Simplifies the search – All options in one place – A streamlined application and an individual or family can explore every qualified insurance plan in the area 2. Most people will be able to get a break on costs – 90% of people who are currently uninsured will qualify for discounted or free health insurance 3. Clear options with apples-to-apples comparisons – All health insurance plans in the Marketplace present their price and benefit information in plain language 3 Things to Know about the Marketplace…

 A new way to get health insurance Enrollment starts October 1, 2013 Coverage begins as early as January 1, 2014 About 25 million Americans will have access to quality health coverage Up to 20 million may qualify for help to make it more affordable The Health Insurance Marketplace

What is the SHOP Marketplace? SHOP = Small Business Health Options Program A new, streamlined way for small employers to offer health insurance to their employees beginning in 2014 (Access to SHOP begins October 1, 2013) Part of the new Health Insurance Marketplace established by the Affordable Care Act (ACA) Offers access to health insurance plans that must include certain “essential health benefits” Works with new insurance reforms and tax credits to lower barriers to offering health insurance that employers face

The Situation for Small Employers Today Many obstacles to offering health insurance to employees Difficulty comparison shopping between plans Unpredictable rate increases Higher rates for groups with: o Women o Older workers o Workers who have chronic conditions or high-cost illnesses (in most states) Waiting periods for coverage of pre-existing conditions

Removing the Obstacles: Insurance Reforms Now, insurance companies: Face limits on how much premium revenue they can spend on administrative costs and take in profits. Must disclose and justify proposed certain rate hikes, generally of 10% or more, which the state or the U.S. Department of Health and Human Services review Starting in 2014, insurance companies: Can’t charge higher rates: o For those with pre-existing health conditions o For women o Based on individual’s health status Face limits on charging additional premiums for older employees Will pool risks across the small group market – inside and outside the SHOP Marketplace

Removing the Obstacles: Tax Credits The Small Business Health Care Tax Credit Is available to those employers : With fewer than 25 “full-time equivalent” employees Whose employees’ wages average less than $50,000 per year Who contribute at least 50% of employees’ premium costs Who buy health insurance through the SHOP only, starting in 2014 Is worth: Up to 35% of employer’s premium contribution (up to 25% for tax- exempt employers) now Up to 50% of employer’s premium contribution (up to 35% for tax exempt employers) starting in 2014

Removing the Obstacles: Choice and Transparency The SHOP Marketplace will offer small employers: A choice of health plans Meaningful comparisons between plans Choice to work with a broker or independently Coming soon: Option to offer employees a choice among qualified health plans across multiple health insurance companies starting in 2015 (The SHOP in some states may offer this option in 2014)

Marketplace Effect on Small Business Starting in 2014, a SHOP will be available in each State. Once a group is enrolled, its rate is guaranteed for 12 months. To enroll, employer must: – Have its principal place of business or an employee worksite in a SHOP’s service area. – Have at least 1 eligible employee: In most cases, spouses and children cannot be counted. Sole proprietors without other employees may enroll through the individual market Marketplace.

Enrolling in SHOP: Who, When & How? Who’s eligible? Small businesses with fewer than 100 full-time equivalent employees Most states will keep upper limit of 50 FTEs in 2014 and 2015 When can businesses enroll? Starting October 1, 2013, for coverage beginning January 1, 2014 Thereafter, throughout the year How can businesses enroll? Directly through the SHOP Through a broker registered with the SHOP

How SHOP Works: Different Plan Options for Different Budgets SHOPs will offer choice of insurers, Qualified Health plans, and financial protection levels All health plans in the SHOP must offer “essential health benefits” o Items and services within 10 categories such as doctor visits, preventive care, hospitalization and Rx Plan choices are grouped by ‘metal level’: Bronze, Silver, Gold, Platinum ‘Metal levels’ generally reflect the plan’s generosity in covering cost of benefits for an average enrollee LevelPlan Pays (on average)Employee Pays (on average) Bronze60 %40 % Silver70 %30 % Gold80 %20 % Platinum90 %10 %

How SHOP Works: Moving Toward Employee Choice A key goal of the SHOP : Options for small employers and their employees Such as offering employees a single plan or a choice of plans The SHOP in each State has some discretion over which options offered In 2014 only: Under a rule issued on May 31, 2013, the SHOP isn’t required to offer an employee choice option 2015 and after: The SHOP must offer small employers the option to offer employee choice of all plans in single metal level The SHOP can choose to make additional options available to employers

How SHOP Works: Employer Control and Simplicity Single Plan Option (a majority of states will offer only this option in 2014 under new rule) Employer: chooses which qualified health plan to offer decides percentage of premium to contribute toward employee premium cost Single Metal Level Employee Choice Option (available in all States starting 2015) Employer: chooses a metal level sets a single premium contribution amount -- for all employees gets a single bill – makes single payment to SHOP Employee: chooses any plan in the designated metal level pays the difference between employer contribution and plan premium

Employer Mandate The Department of Treasury decided to delay for one year the mandatory employer and insurer reporting requirements – Simplify the new reporting requirements – Provide time to adapt health coverage and reporting systems As a result, employer shared responsibility requirement is delayed until 2015 SHOP will still open in 2014 – Employees can still access tax credits and cost reductions

SHOP: Basic Guarantees All qualified health plans offered through the SHOP: Will provide “essential health benefits” Ambulatory patient services Emergency services Hospitalization Maternity and newborn care Mental health Prescription drugs Rehabilitative services Laboratory services Pediatric services Preventive/Wellness/ Chronic disease management Must be licensed and in good standing Offer adequate selection of doctors & hospitals Protect employees against catastrophic costs

Advantages of SHOP To the extent permitted by States, agents and brokers of all sizes will be able to help small employers enroll through SHOPs. Issuers participating in SHOP will present cost and coverage information in a standard format that’s clear and easy for agents and brokers to explain to clients. Applications will generally require less paperwork than current small group market XX

SHOP: a Market-based Approach Uniquely American: Relies on private health insurers Spurs competition for customers based on price and quality, rather than by avoiding risk Uses models pioneered by states

The Bottom Line The SHOP helps small businesses by: Giving employers a choice of health insurance plans Providing apples-to-apples comparisons between health plans Providing exclusive access to tax credits for many small employers Soon: Providing the option to offer employees a choice of health plans

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