The Affordable Care Act doesn’t require small employers — those with 1 to 50 employees — to provide health insurance now or in the future. But it does create the Small Business Health Options Program, or SHOP, an insurance exchange similar to the one for individuals and families. In Washington state, it is available in only two counties.
Here are options for small employers for 2014.
Small-group insurance market
This market now exists for small employers and will continue functioning. Premiums here have historically been higher because the market is “community rated,” meaning prices are not adjusted for specific businesses based on the health of their employees. Because of equal pricing, the market has attracted businesses with more sick and older workers.
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Associations and trusts
This has been the most popular health-insurance option for small employers because the rates are generally lower. Insurance companies selling plans through these groups can adjust their pricing according to the health of participants. These groups will continue, but their rules change. Insurance companies can no longer tweak rates according to the health of workers, and associations and trusts must meet new rules, including requirements that their members are in similar lines of work.
Small Business Health Options Program
SHOP is the new insurance exchange created by the Affordable Care Act; in Washington, it’s available only in Cowlitz and Clark counties and only one insurance company is offering plans. Regulators are hopeful that more insurers will join in 2015. Employers are only eligible for tax breaks if they buy insurance through SHOP, though the state has requested an exemption to that rule.
— Lisa Stiffler