SHOP Exchange in SHOP Exchange in NYNY

Eileen Hayes- NYS Department Eileen Hayes- NYS Department of Financial Servicesof Financial Services

Current Small Business Coverage Current Small Business Coverage in New Yorkin New York

Based on modeling performed by the Urban Institute, there are Based on modeling performed by the Urban Institute, there are currently just under 9.7 million New Yorker’s covered through an currently just under 9.7 million New Yorker’s covered through an employer sponsored plan.* employer sponsored plan.* This includes small group, large group and self-insured coverage. This includes small group, large group and self-insured coverage.

Enrollment upon full-implementation of the SHOP Exchange is Enrollment upon full-implementation of the SHOP Exchange is projected at 450,000.* projected at 450,000.*

Full-Implementation of the SHOP Exchange and related tax provisions Full-Implementation of the SHOP Exchange and related tax provisions is projected to save employers 7% of total costs and, on average, is projected to save employers 7% of total costs and, on average, $240 per employee per year on premiums.* $240 per employee per year on premiums.*

It is anticipated that there will continue to be a small group market It is anticipated that there will continue to be a small group market outside the SHOP. outside the SHOP.

**Source: Urban Institute analysis, HIPSM 2011.

SHOP BasicsSHOP Basics The Shop is to act as a “one stop” venue for The Shop is to act as a “one stop” venue for

Small Employers to offer worker choice of Small Employers to offer worker choice of competing Qualified Health Plans. competing Qualified Health Plans.

The initial 2 year Small Employer Tax Credit The initial 2 year Small Employer Tax Credit is only available on coverage through the is only available on coverage through the SHOP Exchange. SHOP Exchange.

PPACA defines small groups as employers PPACA defines small groups as employers of 1-50 employees. Sole proprietors must of 1-50 employees. Sole proprietors must enroll for coverage in the individual enroll for coverage in the individual exchange (may be eligible for individual exchange (may be eligible for individual premium tax credits). premium tax credits).

SHOP Basics Continued…SHOP Basics Continued…

Regional v. Statewide ExchangesRegional v. Statewide Exchanges SHOP Exchanges can be on a regional or statewide SHOP Exchanges can be on a regional or statewide

basis. basis.

Due to NY rating rules, a carriers experience will be Due to NY rating rules, a carriers experience will be blendedblended

Marketing will likely be on a regionally basis. Marketing will likely be on a regionally basis.

The SHOP must perform the following functions The SHOP must perform the following functions in the same manner as the individual exchange. in the same manner as the individual exchange. Basic Enrollment, notification, etc…Basic Enrollment, notification, etc… Administer open and special enrollment periodsAdminister open and special enrollment periods Certification of QHPsCertification of QHPs Provide consumer assistance tools (call center, website, etc…)Provide consumer assistance tools (call center, website, etc…) Privacy and security of personal information Privacy and security of personal information Oversight and financial integrityOversight and financial integrity Quality ActivitiesQuality Activities

SHOP Eligibility and SHOP Eligibility and Administrative FunctionsAdministrative Functions

The SHOP must determineThe SHOP must determine Employer group eligibility Employer group eligibility Eligibility of each employeeEligibility of each employee Sufficiency of DocumentationSufficiency of Documentation

The SHOP mustThe SHOP must Bill the employer directly in aggregate and Bill the employer directly in aggregate and

collect premiumscollect premiums Reconcile different contribution rates and Reconcile different contribution rates and

administer different employee choices administer different employee choices

Enrollment and Rating Enrollment and Rating PeriodPeriod

Enrollment Periods-Enrollment Periods- While final rules from HHS have not been provided, While final rules from HHS have not been provided,

they will likely contain specific enrollment periods for they will likely contain specific enrollment periods for employees. They will also likely include special employees. They will also likely include special enrollment periods for new hires and specific life enrollment periods for new hires and specific life events (e.g. Divorce, Marriage and other involuntary events (e.g. Divorce, Marriage and other involuntary loses of coverage). loses of coverage).

Rates must be guaranteed for 12 months. Plan Rates must be guaranteed for 12 months. Plan year starts when employer first enrolls. year starts when employer first enrolls.

New employees can enroll during plan year at New employees can enroll during plan year at the same premium rate. the same premium rate.

SHOP could offer employees more SHOP could offer employees more choice:choice:Employer picks tier, employee picks plan on tier

Health Health Plan APlan A

Health Health Plan BPlan B

Health Health Plan CPlan C

Health Health Plan DPlan D

PlatinumPlatinum

GoldGold

SilverSilver

BronzeBronze

Employee picks any plan, any tier

Health Health Plan APlan A

Health Health Plan BPlan B

Health Health Plan CPlan C

Health Health Plan DPlan D

PlatinumPlatinum

GoldGold

SilverSilver

BronzeBronze

Employer selects plans, employees picks from selected plans

Health Health Plan APlan A

PlatinumPlatinum

GoldGold

SilverSilver

BronzeBronze

Employer selects single plan

Health Health Plan APlan A

Health Health Plan BPlan B

Health Health Plan CPlan C

Health Health Plan DPlan D

PlatinumPlatinum

GoldGold

SilverSilver

BronzeBronze

Important SHOP Policy Important SHOP Policy ConsiderationsConsiderations

Active v. Passive PurchaserActive v. Passive Purchaser The SHOP may either negotiate rates with specific insurers or act as The SHOP may either negotiate rates with specific insurers or act as

a clearinghouse allowing all insurers who qualify as QHPs to a clearinghouse allowing all insurers who qualify as QHPs to

participate.participate.

Merging MarketsMerging Markets The state must decide whether to blend the risk pool for small The state must decide whether to blend the risk pool for small

group and individual markets.group and individual markets.

Group SizeGroup Size By 2016, the state must expand group size to 100. Until 2016, By 2016, the state must expand group size to 100. Until 2016,

state may decide whether it will define small groups as 50 or less state may decide whether it will define small groups as 50 or less employees or allow it expand to 100 employees. employees or allow it expand to 100 employees.

SHOP Pitfalls and SHOP Pitfalls and ConcernsConcerns

Adverse Selection- Adverse Selection- Steps must be taken to ensure Steps must be taken to ensure that healthy employees are not steered to markets that healthy employees are not steered to markets outside the SHOP and sick ones into the SHOP.outside the SHOP and sick ones into the SHOP.

Broker Engagement- Broker Engagement- The knowledge and expertise The knowledge and expertise of the broker community must be utilized by the of the broker community must be utilized by the Exchange.Exchange.

User Friendly- User Friendly- The SHOP must be easy to navigate The SHOP must be easy to navigate and use for small employers and employees. and use for small employers and employees.

Employer Tax Penalty Employer Tax Penalty Starting in 2014, employers with 50 or more “full-time Starting in 2014, employers with 50 or more “full-time

equivalent” employees will have to pay a tax penalty if equivalent” employees will have to pay a tax penalty if an employee receives a premium tax credit. an employee receives a premium tax credit. ““Full-time equivalent” employees are defined as those working more Full-time equivalent” employees are defined as those working more

than 30 hours a week and may include a percentage of part-time than 30 hours a week and may include a percentage of part-time employees. employees. To determine if part-time employees count towards the employer size, To determine if part-time employees count towards the employer size,

the employer must take the total hours of all part-time employees per the employer must take the total hours of all part-time employees per month and divide it by 120. month and divide it by 120.

e.g.- A business hires 35 full-time employees (30+) hours a week. e.g.- A business hires 35 full-time employees (30+) hours a week. The firm also has 20 part-time employees who work 24 hours per The firm also has 20 part-time employees who work 24 hours per week (96 hours per month). The employer has to take the total week (96 hours per month). The employer has to take the total hours of the part-time employees (20 x 96 hours=1920) and divide hours of the part-time employees (20 x 96 hours=1920) and divide the total hours by 120 (1920/120=16). In this example, the the total hours by 120 (1920/120=16). In this example, the employer would be a large employer because he has 35 full-time employer would be a large employer because he has 35 full-time employees and the total hours of the part-time employees equal 16 employees and the total hours of the part-time employees equal 16 full-time employees resulting in 51 “full-time equivalent” employees. full-time employees resulting in 51 “full-time equivalent” employees.

Excludes full-time seasonal employees working less than 120 days a Excludes full-time seasonal employees working less than 120 days a year. year.