N.J. small employers could be eligible for tax credits through ACA’s SHOP

Some New Jersey small employers could be eligible for tax credits to help defray the high cost of health insurance if they buy coverage for their workers through SHOP, the Affordable Care Act’s online small employer health insurance marketplace at HealthCare.gov.And while the restrictive rules that limited SHOP’s popularity this year will remain in place for 2015, experts said SHOP could gain traction in 2016 and beyond, when its full rollout offers a much wider menu of health plan choices — thus making SHOP more attractive to small employers and their workers.

In 2014, it’s estimated that about 100 New Jersey employers used SHOP, the “Small Business Health Options Program.” A key reason for SHOP’s low popularity in New Jersey, experts say, is that relatively few New Jersey employers could qualify for SHOP tax credits.

Right now, the main reason to use SHOP for small employers is to get those tax credits, since there are more health plan choices in New Jersey’s traditional small-group insurance market.

In 2014, and again in 2015, three insurers will offer plans via SHOP: Horizon Blue Cross Blue Shield of New Jersey, AmeriHealth New Jersey and Health Republic Insurance of New Jersey. Employers who buy coverage in the New Jersey off-exchange small group market can choose plans from those three companies, as well as from Aetna, Cigna and UnitedHealthcare/Oxford.

To be eligible for the SHOP tax credit, employers must have fewer than 25 employees; must pay at least half their workers’ premiums and the average wages for the group can’t exceed $50,000 a year. The tax credits are on a sliding scale and employers could get a maximum credit equal to 50 percent of their health insurance premiums. Employers can only get the tax credits for two years. Experts point out that many New Jersey small employers won’t qualify for the SHOP tax credits.

One employer who will consider SHOP for 2015 is Henry Passapera, co-owner of P&R Trading in East Rutherford, a supplier of aircraft parts and equipment.

“I’m going to take a look at SHOP this year,” said Passapera, who provides health insurance to his 12-person staff. He said he will ask his health insurance broker to research SHOP and advise him whether it’s a good alternative for his company.

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“Everybody should look at SHOP,” he said. “As small businesses, we should look at all the options and make sure that we’re getting the best rates.”

Open enrollment on HealthCare.gov for both SHOP and individual coverage began Nov. 15 and ends Feb. 15, 2015.

Just as in 2014, employers who use SHOP to buy 2015 coverage can offer their employees only one insurance plan from just one insurer.

That’s all set to change in 2016, when the “employee choice” feature of SHOP kicks in. Employers will be able to choose a metallic tier for their employees — bronze, silver, gold or platinum — and the employees can then choose any plan in that tier from any of the insurers on SHOP. And although right now SHOP is limited to employers with fewer than 50 workers, it will go up to 100 in 2016.

Some experts predict that once the full employee choice feature of SHOP arrives in 2016, SHOP will be attractive to employers, even if they don’t qualify for tax credits. But for now, SHOP is a mere sliver of the state’s total small group market for employers with under 50 workers. About 600,000 New Jersey employees and their families were covered in the small group market at the end of the first quarter of 2014, according to the state Department of Banking and Insurance.

Horizon is the largest provider of health insurance in that small-group market, with a 57 percent market share at the end of the first quarter.

Horizon spokesman Tom Vincz said that, for 2015, the company is offering eight plans on the SHOP exchange, including new innovative patient-centered plans. The new patient-centered plans feature lower premiums and no deductible when members receive services from Horizon’s network of patient-centered doctor practices, which seek to coordinate patient care, improve quality and lower costs.

Vincz said: “Early results of Horizon’s patient-centered program demonstrate more coordinated care is improving patient outcomes and satisfaction. There are more than 3,700 patient-centered doctors in Horizon’s program, making it the largest network of patient-centered practices in New Jersey.”

Horizon’s current enrollment through the SHOP exchange is a few hundred members.

“Horizon plans to continue to work with small employers and their brokers to offer a variety of affordable health plan options on the SHOP exchange,” Vincz said.

Mike Munoz, senior vice president, sales and marketing for AmeriHealth, said the company has enrolled 65 small employer groups through SHOP for 2014 — a tiny fraction of its New Jersey small group business, which he said has about 11,000 employers.

“I really don’t see SHOP becoming a meaningful part of our business until after 2016,” when the full employee choice feature of SHOP arrives, he said.

Munoz said AmeriHealth is well aware that employers are looking for a lot of coverage choices and options. To that end, in the off-SHOP group market, AmeriHealth offers New Jersey employers of all sizes a “private exchange” product. The employer gives workers a set budget to shop online for their own health plan, thus enabling them to select the coverage that meets their needs and their budget.

Private exchanges are offered by several health insurers including Horizon, Aetna and Cigna.

“The employee is making the decision on what is right for them, and the employer gets out of making that decision,” Munoz said.

That, in fact, is how SHOP is eventually supposed to work: Employees shop for their own health plan from among a variety of choices, similar to the cafeteria plans offered by many large employers.

AmeriHealth is one of three insurers that opted to offer both SHOP and individual coverage to New Jersey employers and consumers when HealthCare.gov kicked off in 2014. In 2015, the company will offer 14 different plans on SHOP.

Munoz said, “For us to be a true player within the state, we have to play in all markets effectively, and have a commitment to them.”

Health Republic Insurance of New Jersey attracted a handful of employer groups via SHOP this year; most of HRINJ’s members are individuals and their families.

Spokeswoman Cynthia Jay said it’s hard for many New Jersey employers to quality for the SHOP tax credits, since New Jersey generally pays higher wages than most states.

She said in 2015, the company will be offering small group and individuals policies designed to “help meet the needs of businesses and individuals in New Jersey.”

John Sarno, president of the Employers Association of New Jersey, said, “In 2016 there is the potential for SHOP to get traction.” The employees will choose their health plan among multiple insurers, and the employer writes one check to pay for the entire group’s coverage.

Traditionally, small employers have chosen their employee’s health plans. For SHOP to work, it requires “a transformation to employees shopping for themselves and buying the best plan for themselves,” Sarno said. “These are great concepts, but really the execution has to be flawless.”

UnitedHealthcare’s Oxford brand entered the New Jersey ACA marketplace on HealthCare.gov for 2015 when open enrollment began Nov. 15. The company is offering products to individuals, but not to small employers on SHOP; Oxford sells small group coverage to New Jersey employers outside SHOP.

Chuck Cerniglia, vice president, sales and account management at UnitedHealthcare, said, “We will review over the course of 2015 the opportunity to participate in the New Jersey SHOP Exchange in 2016.”

Oscar Insurance is a newcomer to New Jersey’s individual health insurance market for 2015, but is not offering small group plans.

An Oscar spokesperson said: “Oscar was built with the consumer in mind and is focused on providing the best consumer experience possible for its members. Oscar will maintain its focus on individual and family plans in 2015 and does not have plans to participate in the SHOP at this time.”

Aetna provides individual and group coverage in New Jersey, but opted not to participate in the state’s HealthCare.gov exchange in 2014 and 2015.

Spokeswoman Susan Millerick said: “At this early point, we do not have a firm decision on the New Jersey exchanges for 2016. However, New Jersey is an important market for Aetna and we definitely will continue to carefully consider participation for 2016, particularly as we develop new products for New Jersey consumers that we believe could be highly competitive in the marketplace.”

Cigna provides coverage to New Jersey employers but opted not to participate in the state’s HealthCare.gov marketplace in 2014 and 2015. “We continue to assess the marketplace but have not yet made any decisions about where we’ll participate in 2016,” spokesman Mark Slitt said.