The Skinny on SHOP: The Small Business Health Option Program

Under the new laws, affordable healthcare is right around the corner.

Is it me, or do you feel like all of your business expenses are going up? Rent is higher, payroll fees are up, taxes in California, healthcare costs. These are all fixed costs, meaning that they don’t go down. They stay where they are and that means less money flows to your bottom line.

Check this out. I’ve got a fixed cost for you that could go lower! Like 10-30% lower — now that’s a ballpark.

Your healthcare costs. Yep! Whether you are self employed, a small business with employees, or an individual, you need to know what is coming down the pike on Jan 1, 2014.

First, listen to my radio show, Shop Talk for Entrepreneurs, where I interview Marcia Davalos, the Southern California Outreach Manager for the Small Business Majority – a small business advocacy group. She gives a great overview of setting up affordable healthcare for your business.

If you are an entrepreneur and you have employees, you need to know about the SHOP marketplace. As we get closer to Jan 1 2014, your employees are going to ask you about this.

Here is the skinny on SHOP, the Small Business Health Option Program:

• Businesses with 2-50 full time employees can use SHOP to offer affordable healthcare coverage to their employees.
• ·      Most states will have a health insurance exchange where small businesses can pool together and buy health insurance at a lower rate. Hopefully this will drive down the costs that small businesses pay. The California one is called Covered California.
• Insurance plans can’t turn you down based on your employees’ health, regardless of pre-existing conditions. Insurance plans can’t charge you higher premiums for women, or increase the group’s premium for employees with higher medical costs.
• You may even qualify for tax credits(you must buy through the SHOP marketplace). A tax credit of $1 means that if you owe $1 in taxes, you would have zero tax liability.
  • The tax credit is worth up to 50% of your contribution toward your employees premium costs.
  • You need to have 25 or fewer employees making an average of $50k or less.
  • You must pay for half of the premium for your employees.
• You can still use your health insurance broker to buy the coverage through SHOP.
  • You pay the same with or without a broker.
• There will be 4 categories of coverage through SHOP: Bronze, Silver, Gold, and Platinum.
  • The plans are based on premiums and out of pocket costs.
• Each state is required to have its own marketplace for health plans. The California one is called Covered California.
• If you like your plan and don’t want to change it, you don’t have to do anything. The SHOP plan is going to be just an additional option.

Step 1: Get in front of this now. Look at what you are spending now for healthcare. Do a hypothetical plan and see how much more money you would make if your healthcare costs went down by 10 – 30%.

Step 2: Check out HealthCoverageGuide.org, HealthCare.gov, and Covered California for more information.

Important Disclosures: These blogs are provided for informational and educational purposes only, represents our views as of the date of the posting only, and may change without notice.  Some of the information has been obtained from third parties and believed to be reliable, but is not guaranteed.  We have not considered any investment objectives or financial situations of any investors and we are not responsible for consequences for any decisions made based on the information in the blogs.  There is risk of loss from investing in securities, which varies depending on different types of investments. Forward looking statements are based on assumptions only and no reliance should be placed on such statements.  We do not guarantee the accuracy or completeness of the information displayed.

Justin Krane, CFP®, CIMA® President/Principal

Justin Krane, is a Certified Financial Planner^TM professional and the President of Krane Financial Solutions.  His savvy, holistic approach to financial planning allows clients to unite their money with their lives and businesses with sound financial decisions. Using a unique system developed from his studies of financial psychology, Justin partners with entrepreneurs to create a bigger vision for their business with education and financial modeling.