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When Small Employers Can Sign Up for SHOP Coverage

The Affordable Care Act allows small employers to make health coverage available to their employees through the Small Business Health Options Program (SHOP). Many of these organizations may wonder whether there are limits on when they can sign up for this coverage.

The short answer is that they can sign up anytime — a SHOP must permit a qualified employer to buy coverage for its employees at any point during the year. (This is often referred to as ‘rolling enrollment.’) However, there are important details to keep in mind.

Minimum participation

Under the Affordable Care Act, SHOPs are intended to allow eligible small businesses to offer employees a variety of qualified health plans. For SHOP purposes, a small employer is one with at least one and not more than 50 employees on business days in the preceding calendar year. (There is an option for states to expand the cutoff to 100 employees.) A SHOP is required to operate in each state. If a state has not established one, the federal government operates a federally facilitated program for small employers in that state.

Under a SHOP’s rolling enrollment, the employer’s plan year is the 12-month period beginning with the plan’s effective date of coverage, but SHOPs may apply a minimum participation requirement. In most states, this means that at least 70 percent of employees must accept the offer of SHOP coverage (or be enrolled in other qualifying health coverage) for the employer to participate in the program. States cannot, however, impose such a requirement during an annual open enrollment period from November 15 through December 15 of each year.

Accurate prediction

Thus, while your company may sign up for SHOP coverage at any time during the year, you must satisfy the minimum participation requirement unless it is an annual open enrollment period. A calculator is available on healthcare.gov to help employers predict whether they will meet the minimum participation SHOP enrollment requirement. Of course, it also is important to keep an eye on Affordable Care Act developments in Washington, which could affect the SHOP. Please contact our firm for assistance in choosing and administering cost-effective health care benefits.

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