The Trump administration is crafting regulations that will allow small employers to bypass government-run exchanges to purchase coverage and still be eligible for a tax subsidy. Part of the Affordable Care Act provides for small employers to be eligible for a tax credit if they purchase health insurance for their workers on federally operated exchanges for small businesses.
However, the Small Business Health Care Tax Credit is only available to employers that bought coverage on the Small Business Health Options Program (SHOP), leaving those who bought plans on the private market out of luck.
Now the Centers for Medicare & Medicaid Services (CMS) has announced its intention to bring in changes that would allow small business to be eligible for a tax credit even if they don’t purchase plans directly from the government-run SHOP marketplaces.
The CMS noted that as of January 2017, 7,600 employers had active SHOP-purchased insurance covering some 39,000 workers around the country. If SHOP-purchased coverage from state-run exchanges (like California) is included, then 27,000 employers had active coverage through SHOP marketplaces, covering nearly 230,000 individuals.
These numbers are far below the 4 million individuals it expected to be covered by SHOP-purchased policies.
To give small firms more flexibility in buying coverage, the CMS is proposing new regulations that would allow a small business or its broker to directly enroll employees with an insurance company, rather than having to do so through the SHOP marketplace and still be eligible for tax credits.
Firms could still be eligible to utilize the ACA’s Small Business Health Care Tax Credit, even if the plan was obtained outside the SHOP marketplaces. The move follows the Obama administration in December repealing a rule that required insurers to offer a SHOP plan in a given state if they wanted to participate in that state’s individual marketplace.
Under the approach that the CMS envisions, “Instead of enrolling online at HealthCare.gov, employers would enroll directly with an insurance company offering SHOP plans, or with the assistance of an agent or broker registered with the Federally-facilitated SHOP.” Employers would still obtain a determination of eligibility by going to HealthCare.gov.
Employers that have enrolled in SHOP coverage for plan years that began in 2017 would be able to continue using HealthCare.gov in 2018 for enrollment and premium payment, until their current plan year ends and it’s time to renew. Under the planned CMS changes, it is anticipated that states operating state-based SHOP marketplaces would be able to provide for online enrollment, or could opt to direct small employers to insurance companies and SHOP-registered agents and brokers to directly enroll in SHOP plans.