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Simplifying SHOP: Small Business Health Options Program


By now I’m sure you’ve heard about the Affordable Care Act, which was signed by President Obama on March 23, 2010. The Affordable Care Act’s health insurance reforms are intended to make health care more affordable and accessible for families, seniors, businesses and taxpayers, but for many small business owners, this change seems daunting and unfamiliar.

Small businesses are now able to research and manage health insurance options via the Small Business Health Options Program Marketplace (SHOP). Never heard of it? That’s ok – we’re about to help you learn everything you need to know.

Small Business Health Options Program Marketplace

The Small Business Health Options Program Marketplace (SHOP) helps small businesses provide health insurance to their employees. The marketplace is open to employers with 50 or fewer full-time equivalent employees, referred to as FTEs. To find out if you qualify, you can use the SHOP Marketplace tool.

Benefits of SHOP

The SHOP Marketplace offers a great deal of flexibility. The marketplace allows you to choose a plan, complete your coverage offering, manage employee participation and pay your premiums online. Rolling enrollment lets small businesses enroll in plans throughout the year and employees can easily enroll online.

SHOP also lets you search for agents and brokers registered to sell SHOP plans via your zip code. You can also use your current agent or broker to help you enroll or find a new one who is familiar with SHOP plans.

Small Business Health Care Tax Credit

To qualify for the Small Business Health Care Tax Credit, you must meet the following requirements:

  • You must have fewer than 25 full-time equivalent (FTE) employees
  • Your average employee salary must be about $50,000 per year or less
  • You pay at least 50 percent of your full-time employees’ premium costs
  • You offer coverage to your full-time employees through the SHOP Marketplace.

The tax credit is worth up to 50 percent of your contribution toward your employees’ premium costs, and for tax-exempt employers, it is worth up to 35 percent. In order to qualify for the tax credit, employers are not required to cover part-time employees (employees working less than 30 hours per week).

The smaller the business, the bigger the credit. The tax credit is highest for companies with less than 10 employees who are paid an average of $25,000 or less. To learn more and to estimate your tax credit, visit the SHOP Tax Credit Estimator.

The U.S. Small Business Administration, the U.S. Department of Health and Human Services and Small Business Majority have come together to offer webinars about the Affordable Care Act and the Small Business Health Care Tax Credit. To learn more and to view the webinar schedule, visit the SBA website at

Health Plans

It’s important to choose a health plan that works for your business. Keep in mind that a plan’s category has nothing to do with the quality of care it will provide. All plans offered through the SHOP Marketplace must provide health benefits, cover pre-existing conditions and offer free preventive services.

Before you choose a plan, make sure that you understand the premiums and the out-of-pocket expenses associated with them. Premiums are usually lower for plans that pay a small share of the medical costs. The lower the premium, the higher the out-of-pocket costs; the higher the premium, the lower the out-of-pocket costs.

Plans are categorized as: Bronze, Silver, Gold, and Platinum. The plans are based on how you and the plan expect to share the costs:

  • Bronze – Covers 60 percent of the total average costs of care
  • Silver – Covers 70 percent of the total average costs of care
  • Gold – Covers 80 percent of the total average costs of care
  • Platinum – Covers 90 percent of the total average costs of care

Platinum plans are usually the highest monthly premiums and lowest out-of-pocket costs.

The Shop Marketplace has an online tool that allows you to view available plan options. To illustrate how the tool works, we entered a Delaware-based zip code for a business with one employee aged 25. We received the following plan options:







All states allow you to select one plan to offer to your employees. There are some states where you can select a plan category like Bronze or Silver and allow your employees to choose either plan from an insurance company. This is called Employee Choice.

Different Business Scenarios

While researching health plans, there are a few business scenarios that you should consider. If you own a business with operations in more than one state or if you own multiple businesses in one state or in multiple states, here’s what you need to know:

Owning a business with operations in more than one state or in a different state

You can choose a single health plan with a multi-state or national provider network and offer it in all of your business operation locations. If this option is chosen, all of your employees in all locations will be counted when calculating your minimum participation rate. Your SHOP Marketplace account should be created in the state where your primary business is located.

Owning multiple businesses in one state or in multiple states

You establish only one SHOP Marketplace account per Employer Identification Number (EIN). If you own multiple businesses with multiple EINs, each business will be treated separately for SHOP coverage regardless of whether the businesses are in the same or different states. Additionally, for each business with its own EIN, the business will have to:

  • Meet SHOP eligibility requirements separately
  • Create a separate SHOP account
  • Fill out separate coverage offerings
  • Manage the SHOP plans separately

Appealing SHOP Actions

Employers and employees can appeal the following two SHOP Marketplace actions:

  • Denial of eligibility of SHOP
  • SHOP not responding in a timely manner

To learn how to appeal a SHOP Marketplace decision, visit the appeal informational page on the SHOP Marketplace website.

Kabbage Takeaway: The SHOP Marketplace offers small business owners the opportunity to explore plans and select the healthcare plans that meet the needs of their small business. Although at first the Affordable Care Act may seem unfamiliar, the SHOP Marketplace provides numerous beneficial tools that make navigating healthcare options a bit less stressful.

To learn more about the Small Business Health Options Program and The Affordable Care Act, visit

How has the Affordable Care Act affected your business and your employees? Tell us about it in the comment section below.


Kabbage Team

Kabbage is here not only to provide access to the small business funding you need, but to also help you grow your business through free marketing tips, webinars, tools and more. Is there something you'd like us to cover or want to get your small business featured on our blog? Send us a note at