Thursday, December 29, 2016

The ‘Cliff Notes’ Guide to the Small Business Health Options Program

The IRA. The SBA. The SBIR program.

If the federal government loves one thing, it’s acronyms.

And here’s another one you might not be familiar with:

The SHOP Program,

Ever heard of it? SHOP stands for the Small Business Health Options Program, and although it might just sound like another bureaucratic agency or government initiative, it could actually help you and your small business untangle one of the most confusing processes of all time:

Getting small business health insurance.

Let’s take a closer look at what the Small Business Health Options Program is, why you should be using it, and how you can get started today.

(Yes, seriously—today.)

What Is the Small Business Health Options Program?

In 2010, President Obama enacted the Patient Protection and Affordable Care Act—which you might know by its nickname, Obamacare.

This law was President Obama’s attempt to increase health care coverage, lower health care costs, and make the industry more transparent, accessible, and fair. He wanted more people to get cheaper coverage …

Including small business owners.

That’s why, as a part of the Affordable Care Act, Congress put aside money to create the Small Business Health Options Program.

Small Business Health Options Program: The Details

Here’s the deal:

Instead of forcing small business owners to navigate a huge, complicated, and frankly disorganized world of business health insurance—with predatory insurance brokers taking advantage of some business owners, and overpriced insurance companies taking advantage of others—the government turned to the Small Business Health Options Program.

(Check it out here.)

The SHOP Program is a single, simple point-of-service that all small business owners can use to look for insurance plans, compare rates and coverage terms, and purchase insurance.

It’s an easy-to-use marketplace that breaks plans down into straightforward categories, lets you compare your options, and gives you the ability to include your employees in the process.

We’ll go over the exact benefits in a bit, but overall, the Small Business Health Options Program makes it much easier, and significantly less stressful, for entrepreneurs to find the small business health insurance plans that they need to grow.

Why Use the Small Business Health Options Program?

Now that we know what the Small Business Health Options Program is—a single marketplace for small business owners to easily find health insurance plans!—let’s talk about why you should consider using it.

“But wait,” you say?

“I don’t want health insurance for my business,” you say? It’s too expensive, or takes too much time to apply, or you never get sick?

That’s all well and good … but if you truly want your small business to grow, then you should really look into small business health insurance.

Here’s a brief overview of why.   

Why Even Get Small Business Health Insurance? A Quick Rundown

Getting small business health insurance can be pricey, time-consuming, and frustrating.

However, it’s very possible that the long-term benefits will outweigh those negatives. Let’s take a look at some reasons why you should be excited to explore the world of small business health insurance:

  • Productivity. Healthy employees are productive employees—and sick employees, well, aren’t. Employees who don’t have health insurance are less likely to visit the doctor or get medication, prolonging their sicknesses and hurting your bottom line.
  • Job satisfaction. Healthy employees are happy employees, too! Health insurance is a tangible way to show your employees that their wellbeing is important to you, too. In fact, studies show that health insurance increases feelings of loyalty and decreases turnover.
  • Recruiting and retaining talent. When people are looking for new jobs, health insurance is high on their “must-haves” list … especially if they have spouses or children. If you want to appear professional in order to attract the best of the best, then health insurance is a must-have for your business, too.

These major benefits aside, getting small business health insurance is the law if you have 50 or more full-time employees or the equivalent.

(And luckily for you, the Small Business Health Options Program is open to any small business with 50 or fewer full-time employees.)

But don’t stress: There are tax credits and write-offs you can make use of to reduce the cost of health insurance, saving your business money each month while increasing its value to your employees and customers at the same time.

And psst—take a closer look at some of these reasons for getting small business health insurance here.

Now that you’re convinced about the merits of small business health insurance, let’s break down the big benefits of the Small Business Health Options Program.

Here’s What the Small Business Health Options Program Does Right

Here’s a list of the 11 largest advantages to using the Small Business Health Options Program marketplace over the alternatives.

(By the way, these alternatives are generally either you partnering up with a broker and trusting them to find you the best deals, or you researching and contacting health insurance companies directly to see if they sell their plans to single businesses. It’s definitely doable, but as you’ll see, the Small Business Health Options Program does a pretty good job of giving you all the power in your business health insurance search.)

Let’s take a look:

1. Search through private plans.

If you were worried that a government marketplace of small business health insurance would only offer government-funded insurance plans—there’s no need to stress.

With the Small Business Health Options Program, you can actually browse a list of private plans potentially available to your small business, depending on which state you do business. This means you can get a competitive deal, which is exactly what you want in health insurance.

2. Easily sort between types of plans.

There are 4 categories of health insurance plans on the Small Business Health Options Program marketplace:

  • Bronze
  • Silver
  • Gold
  • Platinum

The types of metals don’t have anything with a plan’s quality but instead relate to the health care cost split between you and your insurance company. With a Bronze plan, you pay 40% of the cost of your insurance and the company pays 60%, but with a Platinum plan, you pay only 10%.

That doesn’t mean Platinums are better, though! Bronze plans involve the lowest premiums (or recurring monthly costs) but the highest copays (payments on a per-claim basis), while Platinum plans are the exact opposite. So it really depends on what you need, not how “good” of a plan you want.

(There are also “catastrophic” plans, if you’re in dire need.)

Check out the Small Business Health Options Program’s analysis of when these plans are best used here. This system makes it easy for you to filter out the types of plans you don’t want or can’t afford, and save time by focusing on what’s important: the actual coverage specifics.

3. No need to wait for open enrollment.

That’s right—with the Small Business Health Options Program, you can join any time. There’s no need to wait for an open enrollment period or pass some sort of waiting period until you can purchase insurance and offer health care protection to your employees.

This cuts out a massively inconvenient part of the typical health insurance process and gives you a lot more power to search for insurance precisely when you know your business can withstand the added expense.

4. Settle on one plan … or offer your employees the choice.

With the Small Business Health Options Program, you have 2 choices:

Either you can find and pick the health insurance plan that fits your business’s financial situation best, or you can open up that option to your employees.

But don’t panic!

Even if you hand the plan-picking decision over to your employees, that doesn’t mean you can’t budget out the same way—because no matter which plans your employees pick, you can still dictate how much money you’re able to put towards their health insurance.

(You can do this by picking the category of plans they can search through or the company whose plans they can pick from.)

So with the second choice, a relatively healthy employee could opt for a low-cost, low-coverage plan, while an employee with a preexisting condition or a dependent might decide on a pricier plan for its wider safety net. But either way, both employees receive the same contribution towards their plans from your small business.  

5. Choose whether to cover your employees’ dependents.

In an ideal world, your employees’ health insurance would extend to their spouses and children if they needed it, right?

While that would be a great benefit to offer, it’s not always possible with small businesses. Extending coverage past your employees might need to wait until your next stage of growth—but no matter what, you always have the option with the Small Business Health Options Program.

6. Go health, go dental, or go both.

Similarly, the choice to offer plans that cover health, dental, or both is in your hands as well.

On the Small Business Health Options Program marketplace, some insurance plans come with dental coverage—so your monthly premium payment includes both health and dental care.

But you can also purchase stand-alone health insurance plans alongside stand-alone dental insurance plans (or not), depending on if your health plan doesn’t offer dental, if you want a different dental package, or if you only one want or the other.

Ask your employees what they want, and if you’re especially strapped for cash but still want to offer health insurance, then consider ditching dental altogether for the time being.

7. Decide how much to contribute to employee premiums.

This is one of the big advantages of going with the Small Business Health Options Program:

You get to offer health insurance on your own terms.

Running a small business often involves dealing with tight cash flow, and you might not feel comfortable spending money each month on insurance that you could otherwise spend on your product or equipment.

But because we definitely convinced you earlier about how important small business health insurance can be, there’s a good chance you’re feeling a bit stressed out.

Don’t worry. You get to choose how much to put towards your employees’ monthly premiums, based on what their health needs are and what your business can reasonably spend each month.

If your savings are limited, it’s absolutely possible to give employees a barebones coverage plan for now. Know your budget, and you have nothing to be concerned about.

8. Decide how long their enrollment periods are.

While you don’t have to wait around for an open enrollment period of some sort in order to sign up for the Small Business Health Options Program, you can choose when your employees can sign up and change their plans, as well as how long new employees have to wait before registering for health insurance.

This is to help you budget your health insurance expenses and keep all the paperwork tidy. If you’re a seasonal business, for example, your ideal employee enrollment periods are probably different than if you operated year-round.

9. Settle everything online.

Applying to the Small Business Health Options Program? Check.

Browsing all the available insurance plans? Check.

Choosing a plan for you and your employees? Managing your coverage? Paying your insurance premiums? Check, check, check.

The Small Business Health Options Program lets you do everything online, when and where it’s most convenient for you. Its simple, straightforward, and informative website guides you through the right steps and helps you wind up with a health insurance plan you’re satisfied with—no hassle involved.

10. Use an agent or broker, or do everything yourself.

The Small Business Health Options Program makes it easy to partner with a broker or agent—or to brave the world of health insurance on your own, if you prefer.

SHOP-registered agents and brokers can help you search for, pick, apply for, pay, and update the best small business health insurance plans on the marketplace, without charging an extra fee.

You simply need to either find a registered broker or agent, or ask your current one to register themselves (it’s easy!) and then authorize them to represent your business on the marketplace.

And if you don’t have a broker or agent but you definitely want one, the Small Business Health Options Program has a list of registered ones broken down by zip code.

Depending on how much time and energy you’re willing to sink into the health insurance search on your own, it could make sense to find a broker or agent right away, or to try out the SHOP marketplace solo before deciding.

11. Get a tax credit.

If you have fewer than 25 full-time employees (or the equivalent), and they make an average of $50,000 at most, then you could potentially qualify for the Small Business Health Options Program’s health care tax credit.

This credit is worth up to 50% of all costs and expenses you’ll be putting money towards for your employees’ health insurance premiums. That’s a huge deal for small businesses.

Note that, to qualify, you need to cover at least 50% of your employees’ premiums, but you don’t need to over coverage to their dependents or part-time employees (those who work 30 or fewer hours each week).

And the best part for those tiny businesses out there?

The smaller, the better, when it comes to SHOP marketplace tax credits.

For example, if you have fewer than 10 employees, making $25,000 or less each year on average, then you might qualify for an even larger credit.

Get Started with the Small Business Health Options Program in 6 Steps

Now that you know why small business health insurance is important, what the Small Business Health Options Program does, and how it can help you, there’s only one question left to answer:

When can you get started?

Follow these 6 steps to sign up for the SHOP marketplace and get the small business health insurance you want.

1. See If You Qualify

There are 4 basic qualifications you have to hit in order to offer plans through the Small Business Health Options Program to your employees:

You need…

  • 50 or fewer full-time employees or the equivalent. (Some states will let businesses with 100 or fewer full-time employees register with their SHOP marketplace, so if you’re over this limit, don’t give up hope just yet!)
  • All full-time employees onboard. You have to offer coverage to all of your full-time employees to qualify. Covering part-time employees (who work 30 hours or under each week) isn’t a must, but it’s also an option.
  • At least 70% enrollment from those full-time employees you’ve offered insurance to. This can differ by state (check the rules here), so keep an eye out. (Here’s a handy minimum participation rate calculator.) Note that an employee isn’t considered to reject your offer if they already have their own health insurance! Also, businesses who don’t meet this requirement can still enroll between the 15th of November and December each year.
  • Work in the state whose SHOP marketplace you want to use. Each state has its own—but we’ll cover that in the next step.

As you can see, there’s plenty of wiggle room for your small business to qualify for the Small Business Health Options Program. The major sticking point is the size of your business.

2. Check Your State

If you qualify, simply check the Small Business Health Options Program homepage to select your state-specific marketplace. From there, searching for the plans you want is a pretty straightforward process, and the SHOP website will walk you through it.

(By the way, you have to operate in a state in order to make use of its health insurance plans!)

And if you operate in multiple states?

Not to worry: The Small Business Health Options Program can handle that, too. You can either choose a single plan for all employees or create different accounts for each state in which you operate, and pick plans on a state-by-state basis.

Plus, if you own different businesses (whether they’re in the same or different states), you can register multiple accounts for each one. Every business’s employees have different health care needs, and this lets you save money by catering insurance plans to each unique situation.

3. Get an Estimate

Based on your answers to a few questions, the Small Business Health Options Program can give you an overview of the plans that will likely be available to you—and their prices.

You can do this without creating an account or signing up for anything at all, by the way, so you’ve got nothing to lose. Get an estimate to see what sorts of plans your business can afford, and discuss some possibilities with your fellow owners or employees before signing up.

4. Calculate Your Tax Credit

We talked about the Small Business Health Options Program tax credit for extra small businesses already—but now’s the time to see what you would actually qualify for.

Fill out the SHOP marketplace’s 6-question tax credit calculator to see just how much you could save, or take a look at this infographic first:

small-business-health-options-programNext up….

5. Create an Account

If you’ve filled out the calculator, you should get prompted to create an account. If not, simply create an account from your state’s Small Business Health Options Program homepage.

Once you’ve filled in some basic information, you get access to your state’s small business health insurance plans.

6. Apply!

Finally, pick the plan that works best for you and apply!

Applying and enrolling involves gathering some documents, estimating your income, and setting up payments. Check out the SHOP website’s tips and tricks page for a brief overview and our guide to small business health insurance for an in-depth look.

This isn’t the end of your relationship with the Small Business Health Options Program—like we talked about, you’ll still use the SHOP website to manage your premium payments and employee enrollment periods—but you’re done with the heavy lifting!  

The Small Business Health Options Program: The Bottom Line

Hopefully this guide has given you a pretty thorough understanding of why the Small Business Health Options Program is a great way to find, apply for, and manage the small business health insurance you need.

Remember to communicate with your employees about their health care expectations and requirements, and don’t be afraid to use a broker or agent if you’re strapped for time! There’s definitely no shame in not wanting to handle health insurance paperwork on top of the rest of your small business ownership responsibilities.

Good luck!

Have any questions about running a small business? Let us know in the comments below!

The post The ‘Cliff Notes’ Guide to the Small Business Health Options Program appeared first on Fundera Ledger.

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