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Focus on Regulation

Attention Employers: HHS Issues Two Rules Regarding SHOP Exchanges

Section 1311(b)(1)(B) of the Affordable Care Act requires those States that opt to operate an Exchange to establish a Small Business Health Options Program (SHOP) Exchange through which small businesses can purchase insurance coverage for their employees. HHS established standards for the administration of the SHOP Exchanges in the Exchange Establishment Rule published on March 27, 2012. On March 1, 2013, HHS released both a Final Rule and a Proposed Rule that modify and build on these requirements, including:

Notice of Benefit and Payment Parameters for 2014 Final Rule: This Final Rule, among other things:

  • Set standards governing how to determine whether an employer is a small or large employer, and the related determination of whether an employee is a full-time employee. This is relevant because only those entities that meet the definition of a “small employer” will be eligible to participate in SHOP Exchanges through 2016.
  • Established default minimum participation rates for employers to participate in the Federally-facilitated SHOP (FF-SHOP) in those States that fail to establish their own exchange.
  • Outlined a method for employers to make insurance coverage through qualified health plans (QHPs) available to their employees through the FF-SHOP.
  • Amended the “tying” requirements proposed in the Exchange Establishment Rule, such that only those issuers with a sufficient market share of the small group market in the State will be required to participate in the FF-SHOP as a condition of participation in the Federally-Facilitated Exchange (FFE).
  • Created standards regarding insurance broker participation and commissions in the FF-SHOP.

Establishment of Exchanges and Qualified Health Plans; Small Business Health Options Program Proposed Rule: This proposed rule would:

  • Amend the standards for special enrollment periods for people enrolled through a SHOP Exchange to align with those applicable to the rest of the group market as well as to take into account when qualified employees become ineligible for Medicaid or CHIP.
  • Amend the effective date of the employee choice requirements to plan years beginning on or after January 1, 2015. Specifically, while the Affordable Care Act requires employers to offer their employees a choice among all QHPs at the level of coverage selected by the employer (i.e., platinum, gold, silver, bronze), HHS is proposing a transitional policy such that a SHOP would not be required to permit such choice until 2015. While State-run SHOPs will have the option of permitting such choice beginning in 2014, HHS is also proposing that the FF-SHOP will not offer employee choice until 2015. The premium aggregation policy outlined in the Exchange Establishment Rule – designed to assist employers with employees enrolled in multiple QHPs – will be delayed accordingly.

Comments on this proposed rule are due on April 1, 2013. Both rules will be published in the Federal Register on March 11, 2013.