Illinois is one of 18 states recently granted a delay by the Department of Health and Human Services for the employee choice feature of the small business health options program marketplace, or SHOP.But what exactly is employee choice, and why is this important to small business owners? Below are some frequently asked questions and answers to help small employers learn more about this crucial provision of the SHOP.
Q: Just what is employee choice?While the Administration’s decision to allow states to delay employee choice for an additional year was a letdown for small business owners, the SHOP still helps small employers compare and evaluate health insurance options and get the small business tax credit to help with employee premiums.
A: Employee choice is a feature of SHOP that allows small business workers to choose from a number of plans from different insurance carriers. The employer chooses a healthcare plan tier level (bronze, silver, gold and platinum), and the employee then chooses among a variety of health insurance carriers within that tier.
The healthcare plan tier level is based upon what percentage of healthcare costs a plan will cover. For bronze plans, insurers pay 60%. For silver plans, insurers pay 70% of healthcare expenses. Gold plans pay 80% and platinum plans pay 90%. The employee choice option is important to employers and their workers because it allows employees to pick a plan and carrier that works best for their needs, instead of the business owner choosing for them.
Q: Why is the employee choice feature important to small businesses?
A: By including employee choice in the SHOP, the Affordable Care Act reverses a longstanding market trend that left small employers on unequal footing. These kinds of benefits have historically been reserved for large businesses and public employees, while small businesses often have to offer a “one-size fits all” plan with added cost and fewer benefits.
Based on Small Business Majority’s opinion polling, it is clear small business owners want to offer this to their employees. The Small Business Majority found two-thirds of small employers believe allowing employees to choose from multiple carriers is an important element of the SHOP. And for small businesses, this component is fundamental in distinguishing the new SHOP marketplace from the outside health insurance market.
Q: What impact does the delay of employee choice have on Illinois’ small businesses?
A: The HHS final rule allowing states to opt out of employee choice for yet another year harms small businesses because it puts them at a competitive disadvantage to large firms that are able to offer a choice of plans to their employees. In states like Illinois, where the SHOP marketplace is run by the federal government, allowing further delay of employee choice puts small businesses at a competitive disadvantage to small employers in other states where marketplaces have employee choice.
Q: When will Illinois small businesses have access to employee choice through SHOP?
A: Barring any further delays, Illinois will implement employee choice in 2016. Employers will then be able to offer the additional benefit of allowing their employees to choose which insurance carrier they’d prefer to use for their health insurance.
Learn more about the SHOP, employee choice and enrollment by reading the Small Business Majority’s Health Coverage Guide which contains a wealth of information for small business owners regarding enrollment, the Affordable Care Act, and the healthcare system.
Jesse Greenberg
Director, Midwest and West
Small Business Majority
