Obamacare Exchanges Are for Business Owners Too

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By Aditi Mukherji, JD on September 25, 2013 8:57 AM

Obamacare's online Marketplaces, also known as Health Insurance Exchanges, are gearing up to provide both individuals and many small business owners with a place to shop for insurance coverage.

As you probably know, the smallest of small-business employers -- those with 50 or fewer full-time employees -- are not required to offer health coverage to workers under the Patient Protection and Affordable Care Act (aka Obamacare).

However, business owners may shop for health coverage in the Small Business Health Options Program (SHOP) Marketplace.

Understanding Obamacare

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SHOP Exchanges

Most state-run exchanges and the federal marketplace will offer a SHOP exchange that will give employers the opportunity to use one online application to compare prices, coverage and quality when it comes to different health insurance plans.

In the SHOP Marketplace, small business owners can:

  • Control the coverage you offer and how much you pay toward employee premiums before having your employees enroll in the plan (or plans). Employers can choose to have one plan for their entire company, or select several plans from which their employees can choose, according to The Washington Post.
  • Compare health plans online in one place (think Priceline for health insurance), which can help give you a better idea of what your options are.
  • Potentially qualify for a small business health care tax credit worth up to 50 percent of your premium costs (up to 35 percent for tax-exempt employers). You can still deduct from your taxes the rest of your premium costs not covered by the tax credit. Beginning in 2014, the tax credit will be available only for plans purchased through SHOP.

How to Qualify for the SHOP Marketplace

Initially, these SHOP exchanges will be open only for businesses with 50 or fewer workers. But starting in 2016, all SHOPs will be open to employers with up to 100 full-time equivalent workers.

You must have an office or employee work site within the SHOP's service area to use that particular SHOP. The online application will guide you to the right SHOP for you.

If you're self-employed with no employees, you can get coverage through the individual marketplace, but not through SHOP.

Health coverage through SHOP starts as soon as January 1, 2014. Open enrollment begins October 1 for businesses with 50 or more full-time workers; for those with fewer than 50 full-timers, the federal SHOP exchanges won't be open for enrollment until November 1, Reuters reports. Once the exchanges are open, you can sign up and begin offering coverage at any time during the year.

What happens, though, if a business with more than 50 full-time employees chooses not to provide health insurance to its workers? We'll explain the potential penalties tomorrow in our "Understanding Obamacare" series for small businesses.

September 27, 2013 Editor's Note: This post was revised after the Department of Health and Human Services announced that SHOP exchanges for businesses with fewer than 50 full-time employees would not be ready until November 1 because of technical problems.

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