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Delays and Disarray for Small-Business Health Exchanges

Several states have shuttered their marketplaces because of technical problems.

June 29, 2014
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Signing up for health care coverage through the federal health insurance exchanges has been a challenge for many individuals thanks to a host of technical glitches, but for small-business owners the problem has been a series of delays at the federal level and disarray among several state-run marketplaces.

In California, the state shut down its small-business marketplace, known as the Small Business Health Options Program, or SHOP, in February because of technical and customer service problems, leaving business owners to enroll through traditional paper applications. State officials said they hope to relaunch it in the fall. And among employers who enrolled before the shutdown, many are still waiting for their insurance cards to arrive, according to Dave Chase, Small business FYB, July 2014the California director of the Small Business Majority, a nonprofit advocacy group in Washington, D.C.

“Funky things were happening like filling out all the fields and clicking next and getting a message that said you forgot to fill in your ZIP code and other fields that didn’t exist,” he said. “They hope to have it up this year, but we don’t know.”

Oregon, Maryland and Minnesota have also failed to launch a SHOP exchange because of technical problems. And the 32 small-business exchanges operated by the federal government, which were supposed to open last fall, won’t be running until October in an effort to focus on individual enrollments, according to an announcement late last year by the Obama administration.

“Clearly, the SHOP exchanges were put on the back burner in favor of the individual exchanges,” said Kevin Kuhlman, manager of legislative affairs for the National Federation of Independent Business, a conservative coalition of small-business owners based in Nashville, Tennessee. “The delays came slowly over the course of the past year, and discouraged many small-business owners from even pursuing the SHOP exchanges.”

The goal of the SHOP program is to help insure the 31 million people who work at companies with fewer than 50 employees by providing their employers a way to shop and compare among a variety of health insurance options. However, many small-business owners frustrated by technical glitches.

The goal of the SHOP program is to help insure the 31 million people who work at companies with fewer than 50 employees by providing their employers a way to shop and compare among a variety of health insurance options and, in some cases, receive a temporary tax credit to offset the cost. Under the Affordable Care Act, companies with 50 or more workers must offer affordable health insurance by 2015 or pay a fine. Smaller businesses aren’t required to offer medical coverage, but if they do, the plans must meet ACA standards starting this year.

However, many small-business owners frustrated by technical glitches, higher premiums and more paperwork are side-stepping the exchanges completely, preferring to renew their existing non-ACA compliant policies, Kuhlman said. SHOP exchanges were advertised as “a one-stop shop,” he said, that would give small employers more choices and greater administrative savings by making the process easy to use.

But in May, the Obama administration announced that it is limiting employers to offer just one plan from one insurance carrier until 2016 and gave states the option of doing the same, Kuhlman said. This delay was the second time that the “employee-choice,” a key feature of the SHOP exchanges, was pushed back. Federal officials said this was to give small-business owners more time to develop a system that can handle that many options.

But according to Linda Rowings, chief compliance officer with United Benefit Advisors, an Indianapolis-based consulting firm, the delays make it hard for small-business employers to plan their benefit offerings.

“We are now in wait-and-see mode,” she said. “If you sat out 2014 thinking that in 2015 the SHOP exchanges will be fully functional, that may or may not be the case. The fact that this was deferred is disappointing to many people. From an employee relations standpoint, giving people six options of health plans makes you seem like a favorable employer, as opposed to just giving them one choice.”

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