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Facts About Covered California’s Small Business Health Options Program (SHOP)

Due to my previous posts about California’s health insurance marketplace, I’ve received a couple of requests from owners of entertainment production companies in my network to cover health insurance for small businesses.

In response, the topic of today’s blog post will be Covered California’s Small Business Health Options Program (SHOP). The information provided here is applicable to all California small businesses and not specific to the entertainment industry.

In case you’re just tuning in, my previous blog posts discuss how the Affordable Healthcare Act affects Californian’s include Finding Affordable Health Insurance Through Covered California and The Basics of Medi-Cal and Covered California for 2014

This will conclude my introductory series designed to educate my readers about Covered California, the state’s new health insurance exchange and I hope I’ve demystified the whole she-bang for you.

If you get nothing more out of this series at least take this with you: you maybe able to find the exact same health insurance coverage (for those of you who are already insured) but may also qualify for tax credits or assistance with your premiums ONLY if you go through Covered California. If you are currently insured or choose to purchase coverage directly through an insurer, you may not know about these tax credits or premium assistance as your current insurer is under no obligation to inform you and that could cost you money.

At the bottom will be links to obtain more information than I am able to provide.

Small Businesses Requirements to Provide Health Insurance

First, let’s define what a small businesses is in the eyes of the law. Under the Affordable Care Act, a small businesses has 50< full time employees and as such, is not required to provide health insurance for their employees.

Covered California’s small-business program is designed for any business with up to 50 eligible employees. You must have at least one employee other than yourself who receives a W-2 tax form at the end of the year.

Note: If you are self-employed without any employees, you are not eligible for the small-business program but should look into the individual marketplace operated by Covered California.

Employers with 50≥ full-time-equivalent employees or more that do not offer these employees (and their dependents) the opportunity to enroll in minimum essential health coverage may be subject to penalties beginning in 2015.

Businesses with 50< full-time employees are not subject to these penalties.

SHOP Tax Credits for Small Businesses

Small-business owners may qualify for a tax credit to help offset their contribution to their employees’ premium. The tax credit you receive as an employer will depend on a number of factors, including the number of full-time-equivalent employees and the amount you contribute to your employees’ insurance premiums. 
Generally, businesses with 10< full-time-equivalent employees and yearly wages averaging less than $25,000 will qualify for the highest credits. 
There are two phases of tax credits as I’ve outlined below:
  • Starting in 2010 and lasting through tax year 2013, there is a tax credit for businesses with 25< full-time-equivalent employees who are paid an average annual salary of less than $50,000. During this first phase, qualifying employers can receive a tax credit of up to 35% of premium expenses (25% for nonprofits). 
  • Starting in 2014, the maximum tax credit increases to 50% (35% for nonprofits) and is available for a total of two consecutive years. 
To qualify for any tax credit, employers must contribute at least 50% of employees’ premium costs.

When is the enrollment period for SHOP?

Unlike individuals and families, there is no designated open-enrollment period for SHOP. This gives employers the option to enroll either according to their current policy’s renewal date or by another effective date of their choosing. Employers can enroll in Covered California’s SHOP throughout the year.

Here’s some milestones to keep in mind:

  • In 2014, Covered California will begin offering health insurance plans to employers with 50< employees eligible employees, for coverage effective Jan. 1, 2015.
  • In 2015, Covered California will expand to offer health insurance plans to employers with 100≤ employees eligible employees, for coverage effective Jan. 1, 2016.

Conclusion

That’s a wrap, folks, on my three-part blog series introducing fellow Californian’s to the salient points of the Affordable Care Act and how it pertains to Covered California, the state’s new health exchange.

Please remember what I said earlier. It’s worth repeating: you maybe able to find the exact same health insurance coverage (for those of you who are already insured) but you may also qualify for tax credits or assistance with your premiums ONLY if you go through Covered California. If you are currently insured or choose to purchase coverage directly through an insurer, you may not know about these tax credits or premium assistance as your current insurer is under no obligation to inform you and that could cost you money.

If you have any questions, just feel free to contact me and I’ll help you out as best as I can but your best bet is to go the website. If you prefer to talk to a real human bean, you can find a Certified Enrollment Specialist here, or contact an insurer at the State Health Benefit Exchange here.

It’s been a pleasure exploring the options for health insurance together with you!


This series of blog posts including Finding Affordable Health Insurance Through Covered CaliforniaThe Basics of Medi-Cal and Covered California for 2014 and Facts About Covered California’s Small Business Health Options Program (SHOP) is dedicated in loving memory to Martin Bosworth.