On June 10, 2014, the Department of Health and Human Services (“HHS”) announced it will allow 18 states to delay, until 2016, the “employee choice” portion of the Affordable Care Act’s Small Business Health Option Program (“SHOP”).  As background, SHOP is an online insurance exchange for employers with 50 or fewer full-time employees (100 or fewer full-time employees starting in 2016) to provide a variety of tiered healthcare plan options to their employees.  The “employee choice” feature allows employees who search the exchanges to choose any health plan (bronze, silver, gold, and platinum) that their employer has selected.

Previously, HHS announced that states could petition for waivers to delay the “employee choice” portion of SHOP if they believed it would lead to significant price increases in the small-business insurance market.  For the 18 states that petitioned, the HHS announced all were granted a delay, which means that they will only offer employees a single health plan from which to choose coverage.

The states that were granted the delay and will not be offering “employee choice” in 2015 are: Alabama; Alaska; Arizona; Delaware; Illinois; Kansas; Louisiana; Maine; Michigan; Montana; New Hampshire; New Jersey; North Carolina; Oklahoma; Pennsylvania; South Carolina; South Dakota; and West Virginia.

The remaining states, including the 14 states using a federally facilitated SHOP exchange, will be instituting the “employee choice” portion of SHOP coverage in 2015. Additional information about the SHOP exchange is provided here.

For more information on the SHOP exchanges, please contact your Executive Compensation and Employee Benefits Counsel at Smith, Gambrell & Russell.