Multi-State Companies Face Problems with Small Business Exchanges

by | November 14, 2014

By Jordan Shapiro

Businesses with employees in multiple states could face additional hurdles when looking to offer health insurance coverage through the online marketplace.

The online access to the Small Business Health Options Program, or SHOP, is scheduled to go live Nov. 15. Firms with fewer than 50 full-time workers will then be able to sign up for SHOP plans through HealthCare.gov.

But like the marketplace for individual customers, SHOP plans will be organized by state — posing an additional challenge to small employers with workers who live or work in different states.

The problem isn’t new as firms have coped with the issue of insuring multistate businesses for years. But it could create a stumbling block to small businesses looking to use the SHOP marketplace to provide health insurance — and potentially secure a lucrative tax credit worth up to 50 percent of the health coverage’s cost.

Employers looking to offer coverage through SHOP must create a HealthCare.gov account, upload an employee roster and select the level of coverage they want to offer to their workers.

But each state has varying options and regulations for selecting plans, and possibly different access points.

“Its an ongoing issue of how to purchase insurance that way,” said Mary Timmel, an outreach manager for the Small Business Majority. “It does get a little complicated.”

In Missouri, for example, employers will be able to select a baseline level of coverage for their workers, who would then be responsible for selecting whatever plan best meets their needs.

That option, however, doesn’t exist in Illinois’ SHOP marketplace, where employers will only be able to select one plan for their employees.

Federal guidelines for the SHOP exchange say that firms should purchase SHOP coverage through the state where their business address is located. If they have multiple business addresses, then they may need to offer different plans for each state in which they have a location.

“The employer can decide whether they want to offer coverage through the Missouri marketplace or if they want to offer it through both” locations, said Linda Blumberg, a health policy expert with the Urban Institute.

If the states both have federally facilitated marketplaces, then the business seeking SHOP coverage would need to create only one HealthCare.gov account.

But if one of the business locations is in a state with its own exchange, then the company would need to create an account for each marketplace. Missouri and Illinois both have exchanges run by the federal government.

Blumberg said enrollment shouldn’t be too complicated for businesses with addresses in Missouri and Illinois, but added that employers should pay attention to which providers are available in a carrier’s network when making decisions about a SHOP plan.

“If the provider network for the plan seem to be more concentrated then they may need to offer something in the other marketplace,” she said.

It’s not clear how multistate businesses will cope with SHOP’s participation requirement given the different eligibility requirements and plan availability.

To participate in SHOP coverage, firms must have 70 percent of their employees agree to join the plan. In an effort to boost sign-ups, federal health officials are waiving that requirement for the first month of enrollment.

Kaiser Health News | Nonprofit News Organization