SHOP: The Health Exchange Platform for Small Businesses

Small Business Health Option Plans (SHOP) is a part of the health insurance Exchange that allows small business firms to purchase group coverage for their employees. Since most American citizen prefer to access coverage at work, SHOP is a step by the federal government to encourage small firms to provide group coverage to their workers.

SHOP will provide tax credits to those companies that provide health insurance to their employees. The exact amount of tax relief will depend on the amount of premium contribution by the company and the size of the company. However, the employer has to pay a minimum of 60% of the expenses to be eligible for these tax credits. The available credits are:

- $1000 for each employee who receives self-only coverage
- $2000 for every employee who receives family coverage
- $1,500 for each employee who receives health insurance coverage for 2 adults or 1 adult and 1 or more children through the employer

Bonus tax credits will be available to those who go beyond the 60% barrier and contribute more towards the premium of their employees.

- $200 for each employee who receives self-only health insurance coverage
- $400 for each employee who receives family health insurance coverage through the employer
- $300 each employee who receives health insurance coverage for 2 adults or 1 adult and 1 or more children through the employer

The tax credit, as mentioned earlier, will also depend on the size of the company. Lesser the number of employees more shall be the credit. There would be no tax credit for firms with more than 50 employees. Here is a look at the tax credit scheme:-

10 or fewer full-time employees 100%
More than 10 but not more than 20 full-time employees 80%
More than 20 but not more than 30 full-time employees 60%
More than 30 but not more than 40 full-time employees 40%
More than 40 but not more than 50 full-time employees 20%
More than 50 full-time employees 0%

The various types of health plans available through the SHOP will be the same as those available on the health Exchange. The plans would be divided into various categories like:

1. Bronze Plan: 60% of the costs with HSA out-of-pocket limits
2. Silver Plan: 70% of the costs of the plan with HSA out-of-pocket limit
3. Gold Plan: 80% of the costs of the plan
4. Platinum Plan: 90% of the costs of the plan with the HSA limit
5. Catastrophic Plan: For those below the age of 30 and are exempted from the mandatory purchase of health policy.

SHOP is a subset of a much bigger platform known as the health Insurance Exchange. Each state will have a separate Exchange that will be governed by the state administration. If the state is unwilling to set up an Exchange, then the federal government will take over the project.

Shaun Mike is an expert on health insurance Solutions and is currently studying about the intricacies of the state health exchange that are to be formed soon.