6 Key Facts Small Businesses Need to Know About Public Health Care Exchanges
Question 1: What is a SHOP exchange?
Question 2: How will the SHOP exchange work in my state?
Question 3: How will small businesses be impacted by exchanges?
Question 4: How will SHOP exchanges affect health care costs for my business?
Question 5: How will SHOP exchanges affect my employees?
Question 6: How do Aflac supplemental insurance policies fit into exchange options?
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The Small Business Health Options Program (SHOP) exchange is a key provision of the Affordability Care Act (ACA). Our experts have compiled a list of common questions and answers to help small business leaders understand some basics of health care exchanges and how they will impact benefits available to employees beginning in 2014.

Question 1: What is a SHOP exchange?

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Answer: A SHOP exchange is a web portal where small businesses (with up to 50 employees) can shop for and buy private health insurance for their employees.

Question 2: How will the SHOP exchange work in my state?

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Answer: The structure of each SHOP exchange will depend on your state’s governance decisions. The law requires each state to establish a health insurance exchange that provides a marketplace for individuals and small employers to buy major medical insurance by January 1, 2014.

The U.S. Department of Health and Human Services (HHS) will evaluate each state’s readiness to operate their exchange on January 1, 2013. For states that do not establish an exchange, the HHS will operate a federally-facilitated exchange (FFE) for those states, and premium tax credits will be available for those who buy individual coverage in an exchange.1

State exchanges will have many unique characteristics, but each will offer four levels of coverage, which vary depending on the proportion of medical expenses the insurance plan is expected to cover. This includes:2

  • Bronze: plan pays 60 percent of medical expenses (actuarial value)
  • Silver: plan pays 70 percent of medical expenses
  • Gold: plan pays 80 percent of medical expenses
  • Platinum: plan pays 90 percent of medical expenses

For information on your state, the Kaiser Family Foundation offers state-specific information on exchange developments on their website at statehealthfacts.kff.org/comparemaptable.jsp?ind=962&cat=17.

Question 3: How will small businesses be impacted by exchanges?

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Answer: One very important responsibility of small businesses will be employee communication. Not only will employees be looking to you to understand important health care reform changes, the law requires all employers who are subject to the Fair Labor Standards Act to notify employees of state health insurance exchanges and potential eligibility for premium credits by March 1, 2013.1 The Kaiser Family Foundation offers additional information about exchanges at kff.org; however, no guidance has yet been provided by the U.S. Department of Labor for this requirement.

Fifty-six percent of employees say they only feel somewhat, not very or not at all informed about the benefits offered at their company; still, nearly 2-in-5 (38%) believe their employer will educate them about changes to their health care coverage as a result of health care reform.3

Question 4: How will SHOP exchanges affect health care costs for my business?

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Answer: Exchanges are expected to offer competitive benefits options to small businesses similar to those that large company group plans provide – giving small businesses the advantage of larger group purchasing power. Additionally, small businesses participating in a SHOP may be eligible for a tax credit of up to 50 percent of their premium payments if they have 25 or fewer full-time employees whose average annual wages are no more than $50,000. Tax-exempt organizations are eligible for a tax credit up to 35%. While it is still too early to tell exactly how competitive the exchanges will be, tax credits coupled with group rates in the exchanges may help your business to provide cost-effective workplace benefits.4

While nearly half of U.S. workers (49 percent) are likely to look for a new job this year, 84 percent of workers say benefits are at least somewhat important in the decision to leave a current employer, and 50 percent say they are very or extremely influential.3

Question 5: How will SHOP exchanges affect my employees?

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Answer: Most business owners recognize that health insurance plays an important role in retention and recruitment, but at the present time, less than half of small businesses are able to offer these benefits at competitive rates. SHOP exchanges will give your business the opportunity to offer competitive benefits options to your workforce. Overall benefits can play a significant role in keeping employees satisfied with their job and increase their likelihood to believe their company is a great place to work. Like no other benefits or perk, health benefits help workers to feel secure about their financial future and their ability to handle unexpected illness or injury. Exchanges may help your business offer robust benefits to stay competitive and keep top talent.

Sixty-one percent of workers believe they’d be at least somewhat likely to accept a job with a more robust benefits package, but lower compensation.3

Question 6: How do Aflac supplemental insurance policies fit into exchange options?

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Answer: Supplemental insurance policies, like the ones offered by Aflac, are a way to offer a broader benefits package to your workforce without adding to your benefits costs. Unlike major medical insurance, these policies pay cash benefits directly to the policyholder if they get sick or injured. Supplemental policies work together with major medical insurance to provide robust protection and preparedness to policyholders. This helps provide an extra layer of financial protection for your employees without adding to your overall cost of benefits.

Aflac policies continue to provide protection to families in any health care system. We have seen this value in Japan, a country that has had a national health care system for many years. In Japan, Aflac is the No. 1 life insurance company in terms of individual policies in force. 5

Seventy percent of those whose employers offer voluntary benefits options believe their comprehensive benefits package safeguards their employees’ health and wellness.3

For more information …

New guidance is expected from the U.S. Department of Health and Human Services (HHS) that may impact your business, your benefits offerings and your workforce. Aflac Insights will continue to provide helpful information at: aflac.com/insights.

To learn more about health care reform and coverage available in your state, visit healthcare.gov, http://cciio.cms.gov and irs.gov.

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