Portion of Small Business Health Options Program Delayed to 2015

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The Obama administration has announced via new rules that they will delay a portion of the implementation of the Small Business Health Options Program (SHOP) to 2015.

The Patient Protection and Affordable Care Act (PPACA) calls for the creation and implementation of health benefits Exchanges for both individuals and small businesses. These marketplaces were to be operational by October 1, 2013 in time for the open enrollment period for a January 1, 2014 effective date. The individual mandate and employer shared responsibility provisions are scheduled to become effective on January 1, 2014. 

The administration announced that SHOPs will only offer one health plan, instead of offering small employer groups a choice of several health plans. As reported in the Wall Street Journal, "For transitional purposes we have proposed that in 2014, a state may elect to have businesses choose one plan to offer employees, and in 2015 employees will be able to choose from the full range of plans in the marketplace," said Fabien Levy, an U.S. Department of Health and Human Services (HHS) official.

The delay will apply to the states in which the federal government will administer Exchanges, and makes the requirement optional for state-run Exchanges. The administration cited operational challenges as the reason for the delay.

The announcement has been met with disappointment by many small businesses. D. Michael Roach, the owner of a women’s clothing store in Portland, said of the delay, “It will limit the attractiveness of exchanges to small business." John C. Arensmeyer, the chief executive of Small Business Majority, echoed the sentiment, saying, “The vast majority of small employers want their employees to be able to choose among multiple insurance carriers.” The decision by HHS to delay the SHOP requirement was, “a major letdown for small business owners and their employees,” said Mr. Arensmeyer.

Senator Mary L. Landrieu (D-La.) also expressed disappointment at the administration’s decision to delay the requirement. Senator Landrieu provided crucial support for the SHOP Exchange in her role as chairwoman of the Senate Committee on Small Business and Entrepreneurship. The delay, Senator Landrieu stated, will “prolong and exacerbate health care costs that are crippling 29 million small businesses.”

While the delay has caused disappointment for some, others anticipated the delay due to HHS’ failure to issue detailed guidance or final rules for the SHOP until late March. 

In a March 27th letter to Marilyn Tavenner of the Centers for Medicare and Medicaid Services, Representative Sam Graves (R-Missouri) criticized the Administration for their actions. “If one of the key goals of supporters of the health care law was to provide small business owners with a competitive process by which they could select from a number of affordable health insurance plans for their employees, then that goal is not in sight,” Graves writes.

Whether a similar delay will be announced for individual Exchanges remains to be seen.

The views expressed in this post do not necessarily reflect the official policy, position, or opinions of BenefitMall.This update is provided for informational purposes. Please consult with a licensed accountant or attorney regarding any legal and tax matters discussed herein.

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The individual mandate and

The individual mandate and employer shared responsibility provisions were scheduled to become effective on January 1, 2014.

Are these delayed until 2015 as well?

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