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Small biz can SHOP for health insurance on exchange

By Jay Greene

Businesses with up to 100 employees that want to purchase health insurance now have an easier way to do so, and more time to consider options.

Under the Patient Protection and Affordable Care Act, small employers can use the Small Business Health Options Program, or SHOP, to purchase health insurance for themselves and their employees.

The SHOP exchange – which will be part of the federal health insurance exchange in Michigan – is expected to simplify administrative processes for companies and offer employees several options for affordable health plans.

Last week, the Obama administration delayed until 2015 the mandate that small-business owners with 50 or more full-time employees offer health insurance or pay a $2,000 per qualified employee penalty. Employer groups complained their members didn’t have enough time to comply with the complex regulations.

With few exceptions, however, individuals must still purchase health insurance or pay a $95 income tax penalty for 2014.

Despite the employer mandate delay, open enrollment will be Oct. 1 in Michigan and other states for small businesses and individuals that wish to purchase insurance on the federal exchange.

Small businesses are expected to save money on health insurance on the exchange by spreading administrative costs, providing greater purchasing leverage, promoting employee choice and pooling their risk across multiple firms, said a report by the Center for Healthcare Research and Transformation in Ann Arbor.

However, because Michigan’s Legislature did not approve a state-based exchange, Michigan’s SHOP exchange will only allow companies to purchase a single plan in 2014. Starting in 2015, multiple plans will be offered.

Statistics show that nearly half of America’s 40 million uninsured are either small-business owners or their employees. Many small businesses are priced out of the health insurance market because they do not have sufficient numbers of employees to spread insurance risk.

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