SHOP Exchange in NY Eileen Hayes- NYS Department of Financial Services

Current Small Business Coverage in New York  Based on modeling performed by the Urban Institute, there are currently just under 9.7 million New Yorker’s covered through an employer sponsored plan.*  This includes small group, large group and self-insured coverage.  Enrollment upon full-implementation of the SHOP Exchange is projected at 450,000.*  Full-Implementation of the SHOP Exchange and related tax provisions is projected to save employers 7% of total costs and, on average, $240 per employee per year on premiums.*  It is anticipated that there will continue to be a small group market outside the SHOP. * * Source: Urban Institute analysis, HIPSM 2011.

SHOP Basics  The Shop is to act as a “one stop” venue for Small Employers to offer worker choice of competing Qualified Health Plans.  The initial 2 year Small Employer Tax Credit is only available on coverage through the SHOP Exchange.  PPACA defines small groups as employers of 1-50 employees. Sole proprietors must enroll for coverage in the individual exchange (may be eligible for individual premium tax credits).

SHOP Basics Continued…  Regional v. Statewide Exchanges  SHOP Exchanges can be on a regional or statewide basis.  Due to NY rating rules, a carriers experience will be blended  Marketing will likely be on a regionally basis.  The SHOP must perform the following functions in the same manner as the individual exchange.  Basic Enrollment, notification, etc…  Administer open and special enrollment periods  Certification of QHPs  Provide consumer assistance tools (call center, website, etc…)  Privacy and security of personal information  Oversight and financial integrity  Quality Activities

SHOP Eligibility and Administrative Functions  The SHOP must determine  Employer group eligibility  Eligibility of each employee  Sufficiency of Documentation  The SHOP must  Bill the employer directly in aggregate and collect premiums  Reconcile different contribution rates and administer different employee choices

Enrollment and Rating Period  Enrollment Periods-  While final rules from HHS have not been provided, they will likely contain specific enrollment periods for employees. They will also likely include special enrollment periods for new hires and specific life events (e.g. Divorce, Marriage and other involuntary loses of coverage).  Rates must be guaranteed for 12 months. Plan year starts when employer first enrolls.  New employees can enroll during plan year at the same premium rate.

SHOP could offer employees more choice: Employer picks tier, employee picks plan on tier Health Plan A Health Plan B Health Plan C Health Plan D Platinum Gold Silver Bronze Employee picks any plan, any tier Health Plan A Health Plan B Health Plan C Health Plan D Platinum Gold Silver Bronze Employer selects plans, employees picks from selected plans Health Plan A Platinum Gold Silver Bronze Employer selects single plan Health Plan A Health Plan B Health Plan C Health Plan D Platinum Gold Silver Bronze

Important SHOP Policy Considerations  Active v. Passive Purchaser  The SHOP may either negotiate rates with specific insurers or act as a clearinghouse allowing all insurers who qualify as QHPs to participate.  Merging Markets  The state must decide whether to blend the risk pool for small group and individual markets.  Group Size  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 employees or allow it expand to 100 employees.

SHOP Pitfalls and Concerns  Adverse Selection- Steps must be taken to ensure that healthy employees are not steered to markets outside the SHOP and sick ones into the SHOP.  Broker Engagement- The knowledge and expertise of the broker community must be utilized by the Exchange.  User Friendly- The SHOP must be easy to navigate and use for small employers and employees.

Employer Tax Penalty  Starting in 2014, employers with 50 or more “full-time equivalent” employees will have to pay a tax penalty if an employee receives a premium tax credit.  “Full-time equivalent” employees are defined as those working more than 30 hours a week and may include a percentage of part-time employees.  To determine if part-time employees count towards the employer size, the employer must take the total hours of all part-time employees per month and divide it by 120.  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 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 the total hours by 120 (1920/120=16). In this example, the employer would be a large employer because he has 35 full-time employees and the total hours of the part-time employees equal 16 full-time employees resulting in 51 “full-time equivalent” employees.  Excludes full-time seasonal employees working less than 120 days a year.