Small business insurance program through Affordable Care Act delayed in S.C.

jholleman@thestate.comJune 13, 2014 

South Carolina, and 17 other states have been allowed to delay until 2016 at the earliest the implementation of a major component of the Affordable Care Act designed for small businesses and their employees.

The Small Business Health Options Program, or SHOP, was designed to allow companies with up to 100 employees to offer a menu of insurance options to their workers. The “employee choice” portion of SHOP was to provide individuals in the company group policies options similar to the gold, silver and bronze plans offered on the federal Health Insurance Marketplace.

In the struggle to roll out the Affordable Care Act’s federal marketplace website last year, the SHOP program portion of the website was scrapped. Though some aspects of the program were implemented through paper documents, the “employee choice” provisions weren’t available in the 32 states using only the federal marketplace for 2014.

With the decisions on how to operate in 2015 looming, 18 of those 32 states asked the federal government to delay “employee choice” for another year. The U.S. Department of Health and Human Services approved those delays in late May.

Ray Farmer, director of the S.C. Department of Insurance, requested the delay in part because insurance companies informed his office rates would rise under the proposed changes. He said the delay is “in the best interest of small employers and their employees and dependents” in a letter to HHS.

The impact of SHOP will be difficult to track this year because few businesses have signed up in the states where it was fully implemented. In California, for example, only 1,223 small businesses covering 8,294 employees and dependents had purchased coverage through SHOP by the end of March.

South Carolina insurers and regulators should have more data on the impact in other states in another year. Among the states that didn’t seek another delay is neighboring Georgia. North Carolina joined South Carolina in opting out for at least another year.

Frank Knapp, president of the S.C. Small Business Chamber of Commerce, thinks the delay is a reflection on confusion by the insurance companies more than potential value to consumers, but he still thinks the concept of an employee choice program will work.

The delay “is unfortunate because this was one of the big selling points for the marketplace for small businesses,” Knapp said.

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