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The Center for Consumer Information & Insurance Oversight

 

Small Business Health Options Program (SHOP)

On March 8, 2016, the Department of Health and Human Services (HHS) published a final rule taking the next step in implementing “employee choice” in the Small Business Health Options Program (SHOP). “Employee choice” provides employers the opportunity to allow employees to choose any health plan at the actuarial value, or “metal,” level selected by the employer. We finalized the addition of a new ‘‘vertical choice’’ model for Federally-facilitated SHOPs (FF-SHOPs) and State-based Exchanges using the Federal platform for SHOP eligibility and enrollment (SBE-FP). For plan years beginning on or after January 1, 2017, employers will be able to offer qualified employees a choice of all plans across all available actuarial value levels of coverage from a single issuer.

Small business markets differ from state-to-state. In order to provide for State-specific evaluations of the impact of vertical choice on adverse selection and resulting changes in plan pricing, and to provide for more uniform small group market coverage options both on and off-Exchange, HHS provided states with additional flexibility by allowing State Insurance Commissioners to recommend that the FF-SHOP in their state not implement vertical choice. Similarly, States with SBE–FPs utilizing the Federal platform for SHOP enrollment functions will be able to opt out of making vertical choice available in their States.

In States where vertical choice is available, a qualified employer would have a choice of three coverage options for both QHPs and SADPs: a single plan, all available plans at a single level of coverage (horizontal choice, as required by the statute), and a choice of all plans offered by a single issuer across all levels of coverage (vertical choice). In States where vertical choice is not an available option for qualified employers, the single plan option and horizontal choice option would continue to be available to qualified employers.

Under the final rule, we recommended that a State with an FF–SHOP that wishes to recommend against offering vertical choice in that State submit a letter to HHS on or before June 10, 2017 for the 2018 plan year, describing and justifying the State’s recommendation, based on the anticipated impact vertical choice would have on the small group market and consumers. An SBE-FP utilizing the Federal platform for SHOP enrollment functions may decide against offering vertical choice by notifying HHS of that decision prior to the beginning of the QHP certification process each year. Below is a list of all states with a FF-SHOP or SBE-FP using the federal platform for eligibility and enrollment functions and provides information on whether vertical choice will be available to SHOP consumers for the 2018 plan year. In total, 29 states with a FF-SHOP or an SBE-FP state using the federal platform for eligibility and enrollment functions will allow for vertical choice for plan year 2018.

HHS Approval of Implementation of Vertical Choice for Plan Year 2019:

Plan Year 2019 Implementation of Vertical Choice

State

State Implementing Vertical Choice for Plan Year 2019

Alabama

Yes

Alaska

Yes

Arizona

Yes

Delaware

Yes

Florida

Yes

Georgia

Yes

Illinois

Yes

Indiana

Yes

Iowa

Yes

Kansas

Yes

Kentucky

Yes

Louisiana

Yes

Maine

Yes

Michigan

No

Mississippi

Yes

Missouri

Yes

Montana

Yes

Nebraska

Yes

Nevada

Yes

New Hampshire

Yes

New Jersey

No

North Carolina

Yes

North Dakota

Yes

Ohio

Yes

Oklahoma

Yes

Pennsylvania

No

South Carolina

Yes

South Dakota

Yes

Tennessee

Yes

Texas

Yes

Utah

Yes

Virginia

Yes

West Virginia

Yes

Wisconsin

Yes

Wyoming

Yes

Notes:

  1. The list provided only applies for the 2019 plan year. States will have the opportunity to opt out of vertical choice each year prior to the beginning of the QHP certification process.

  2. This list does not include SBE States. State-based SHOPs continue to have the flexibility to provide employers with vertical choice or other employee choice options.

  3. For a list of states offering vertical choice for the 2018 plan year, click here.