The Department of Health and Human Services (HHS) recently announced that it will delay online enrollment in the federal Small Business Health Options Program (SHOP) Exchange for one year, until the open enrollment period for 2015, which begins November 2014.  Administration officials stated that the decision was necessary as they prioritized fixes to the individual health exchange.  The delay will apply to the nearly three-dozen states that declined to establish a SHOP Exchange and are relying on the federally established Exchange. 

The SHOP Exchange is designed to help small employers facilitate comparison of available plans and select a plan that meets the needs of the employer and its employees.  For 2014 and 2015, small employers include employers with 1-50 full-time equivalent employees.  Beginning in 2016, the SHOP Exchange will be open to employers with up to 100 full-time equivalent employees.

HHS announced that the delay in online enrollment will not delay the availability of the SHOP Exchange beginning January 1, 2014.  Small employers will still be able to enroll in coverage effective January 1, 2014 through the SHOP Exchange through what HHS refers to as “direct enrollment.”  Under direct enrollment, small employers will typically work through an agent, broker or insurer that offers a certified SHOP plan to enroll their employees in coverage through the SHOP Exchange.  The agent, broker or insurer will help the employer fill out a paper application for SHOP eligibility and send it in to the SHOP Exchange.  Small employers may also submit the application directly to the SHOP without using an agent, broker or insurer.

Beginning in 2014, the small business healthcare tax credit (which applies to employers with 25 or fewer full-time employees) will only be available for plans purchased on the SHOP Exchange (or a similar state-established exchange).