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Healthcare Exchange Delay Means Few Changes for Small Biz

Healthcare Exchange Delay Means Few Changes for Small Biz
The delay of the SHOP online healthcare exchange won't impact most small businesses. / Credit: Healthcare image via Shutterstock

With the end of the year just days away, some small businesses may be putting the final touches on their health care plans for 2014.

One option they no longer have is to quickly sign up online for the Small Business Health Options Program (SHOP) Marketplace. Created under the Affordable Care Act, the SHOP exchange is designed to simplify the process of buying health insurance for businesses with fewer than 50 employees by offering employers options for controlling the coverage they provide and the premiums they pay for each employee.

Late last month, the Obama administration announced it was delaying online registration for the federal SHOP exchange for one year, until November 2014. Those wanting coverage through the SHOP exchange can still get it, they just need to complete the registration process offline now.  

In a statement to the Washington Post, representatives of the Centers for Medicare & Medicaid Services, which is administering the SHOP exchanges, said, "We've concluded that we can best serve small employers by continuing this offline process while we concentrate on both creating a smoothly functioning online experience in the SHOP Marketplace, and adding key new features, including an employee choice option and premium aggregation services, by November 2014."

Rhett Buttle, vice president of external affairs for Small Business Majority, said the delay in small businesses being able to register for SHOP plans online is disappointing.

"However, it doesn't change the fact that the marketplace can offer the most competitive combination of price and quality for small businesses purchasing health insurance," Buttle told BusinessNewsDaily. "Until the online functionality of Healthcare.gov is up and running, small businesses can sign up for insurance in the federal SHOP marketplace through alternative methods."

Cynthia Magnuson, a spokeswoman for the National Federation of Independent Business, said businesses wanting to take advantage of SHOP plans can submit paperwork via mail, fax directly through an insurer, or use an insurance broker. She added that some states that have established their own SHOP exchanges are still allowing for online enrollment.

The delay effectively means very few changes for small business owners when it comes to the procedures for choosing a plan, Magnuson said. She said they are simply relegated to the same system that existed before the law's passage.

"Many small business owners have renewed existing plans early in order to avoid significant premium increases, so the impact of the failed online exchange is likely minimal," Magnuson said. "But the delay of the online exchanges signals to small business owners yet another disappointing missed deadline."

Magnuson said small business owners who provide insurance and would like to continue doing so will have to make use of the system that is currently in place.

"The primary concern for those business owners who offer insurance or who are planning to offer insurance next year is not so much the SHOP exchange failure; it is the fact that premiums are rising rapidly as a result of the law and plans are getting canceled," she said.

John DiVito, president of Flexible Benefit Service Corp., which provides health insurance and benefit administration services, believes private exchanges, rather than the SHOP exchanges, offer small businesses the most flexibility.

He said private exchanges allow employers the ability to give their employees the freedom to shop for their own health care, with their company not having to be involved. Instead of paying for the insurance directly, small businesses using private exchanges can give their employees money to pay for their own insurance.

"They will give those employees money through a pay raise, not through a tax-free event, but they can at least contribute," DiVito said. "They can then say, 'I've always wanted to give you a couple hundred dollars a month for benefits, but I could never do it because we couldn't get a plan in, and here it is. Now you can go out and buy the plan you want.'"

He said this way the employer is still able to provide a sponsored plan, while giving their employees the ability to pick the plans that work best for them.

"A private exchange is the ultimate alternative to small employers who want to provide benefits to their employers," DiVito said.

With so many different plans available, Buttle said small businesses would be best served by working with a broker to find out what options they have for purchasing health insurance.

"There is a lot of misinformation out there, so it's in small businesses' best interests to learn as much as they can about what the marketplace has to offer before making a decision whether to purchase coverage through it or by outside means," Buttle said.

Originally published on BusinessNewsDaily.

Chad Brooks

Chad Brooks is a Chicago-based freelance writer who has nearly 15 years experience in the media business. A graduate of Indiana University, he spent nearly a decade as a staff reporter for the Daily Herald in suburban Chicago, covering a wide array of topics including, local and state government, crime, the legal system and education. Following his years at the newspaper Chad worked in public relations, helping promote small businesses throughout the U.S. Follow him on Twitter.