Today, Covered California™, the state’s new health insurance marketplace (formerly called an exchange), announced the insurance carriers and rates for its small-group market, the Small Business Health Options Program (SHOP). The Fact Sheet PDF can be found here, and the SHOP Health Insurance Plans book PDF can be found here.
The Six Carriers who will Offer Health Insurance Policies in the SHOP Marketplace are:
Blue Shield of California
Chinese Community Health Plan
Sharp Health Plan
Western Health Advantage
What Employers Can Purchase Group Coverage in the SHOP Marketplace?
Small businesses with 50 or fewer employees may offer coverage to their eligible employees through the Covered California SHOP plans when the health insurance marketplace is launched on Oct. 1. Coverage will not be effective until Jan. 1, 2014. In 2014 and 2015, only small businesses with 50 or fewer employees may offer coverage through the SHOP Marketplace. In 2016 this increases to 100 employees. In 2017 California has the option of allowing employers of all size to purchase group coverage through the SHOP Marketplace.
What are the Rates for SHOP Coverage?
Rates vary by level of insurance policy (e.g., bronze, silver, gold or platinum); insurance carrier; employee’s age; and geographic region (there are 19 different geographic regions in California). Today’s Covered California announcement said “the SHOP premiums are generally comparable to 2013 small-group market rates and, in some cases, can save small businesses money on their premiums.” Page 9 of the SHOP Health Insurance Plans book issued today (August 1, 2013) provides some examples of average SHOP rates for a 40-year old employee in different counties (geographic regions).
For example, for a 40-year old employee in Sacramento County (region 3), the average rate for the three lowest-priced silver plans was $329 per month. The specific monthly rates were $295 for Kaiser HSA, $328 for Western Health Advantage HSA and $365 for Health Net PPO.
The average rates for the three lowest-priced silver plans in selected counties were as follows:
$329 for Sacramento County (Region 3)
$316 for San Francisco County (Region 4)
$384 for Alameda County (Region 6)
$274 for Los Angeles – North (Region 15)
$309 for Los Angeles – south (Region 16)
$290 for San Diego County (Region 19)
Will Small Employers buy Directly from the SHOP Marketplace Rather than through Licensed Insurance Agents?
No, the SHOP plans will be sold through licensed agents who are trained and certified by Covered California.
Will the Policies Offered Outside the Marketplace be the Same as those Offered Through the Marketplace?
Yes and no. All Covered California’s SHOP plans offer a standardized set of benefits, and all policies offered through the Marketplace must also be offered outside the Marketplace. Additionally, some or all carriers also might offer other policies outside the Marketplace. All policies must be at least actuarially equivalent to policies offered inside the Marketplace. Although policies in and outside the Marketplace will be the same or actuarially equivalent, it is unclear at this time whether the provider networks for policies offered in the Marketplace will be the same as those for policies offered outside the Marketplace.
Are Small Businesses Eligible for a Federal Tax Credit for Providing Health Insurance?
Yes, small businesses are eligible for a federal health care tax credit if they buy coverage through the SHOP Marketplace and pay at least 50% of the cost of their employees’ health insurance premiums, they have fewer than 25 full-time-equivalent employees for the tax year, and they pay employees an average of less than $50,000 per year. Employers with 10 or fewer full-time-equivalent employees with wages averaging $25,000 or less per year are eligible for the maximum amount of the tax credit, and it phases out between 11 and 25 employees, and between average wages of $25,000 to $50,000. The amount of the tax credit is 50% of the premium amount a private sector employer pays, and 35% of the premium amount a not-for-profit employer pays. To be eligible for the federal tax credits, small businesses must purchase coverage through Covered California’s SHOP.