Small Business Health Options Program

Content sourced from Wikipedia, licensed under CC BY-SA 3.0.

SHOP, the Small Business Health Options Program, is an insurance exchange created by the Affordable Care Act. It helps small employers with 50 or fewer full-time equivalents (FTEs), including nonprofits, offer health and dental coverage to employees. It provides more choice, easier online applications, and simple account management.

Key points
- Employee Choice: In 2015, SHOP added Employee Choice. It’s available online in many states and lets employees choose among several insurance companies.
- Enrollment: SHOP enrollment is year-round, not limited to a single Open Enrollment period.
- How it helps employers: Employers that contribute to their employees’ premiums may qualify for a SHOP tax credit, up to 50% of the employer’s premium contributions (35% for tax-exempt organizations).

Special Enrollment Periods
- Employees generally can’t join outside the initial enrollment unless they qualify for a Special Enrollment Period (SEP), which lasts 60 days after life events like marriage, birth of a child, a move, loss of other coverage, income changes, or unemployment.

Who SHOP isn’t for
- Self-employed individuals with no employees can't use SHOP; they should use the Health Insurance Marketplace instead.

Impact and credits
- As of March 13, 2015, SHOP was shown to improve affordability, helping reduce health costs for taxpayers, workers, and businesses.
- The Small Business Health Care Tax Credit is available to eligible employers offering SHOP-qualified plans. The credit is up to 50% of premium contributions (35% for tax-exempt). Requirements include:
- Fewer than 25 employees
- Average annual wages under $50,000
- Employer pays at least 50% of full-time employee premiums
- Coverage must be through SHOP
- Part-time workers, dependents, and seasonal workers aren’t required to be covered (unless they meet eligibility rules)
- Owners or partners with more than 5% ownership and their family members are excluded
- The credit can be claimed for up to two consecutive years after 2014, on the annual tax return (Form 8941)

How the credit works (example)
- A company with 10 employees and total wages of $250,000 that contributes at least $70,000 toward premiums could receive about $35,000 as a tax credit (50% of the $70,000 contribution).