The SHOP (Small Business Health Options Program) Marketplace was designed by the Affordable Care Act to encourage and help employers with 1-50 employees to offer health insurance coverage to its staff.

Just as with the Individual Marketplaces, SHOP enables employers to compare health insurance plans, calculate costs, and enroll online, in person, via phone or email.

What do you need to know as an employer?

The IRS and Small Business Association have compiled a list of requirements that apply to businesses.  Not all of these provisions will apply to all small groups/employers. Generally, as a small group employer:

  • You must withhold and report an additional 0.9 percent on employee wages or compensation that exceed $200,000 (the employer portion of the tax remains unchanged at 1.45%).  Learn more.
  • You may be required to report the value of the health insurance coverage you provided to each employee on his or her Form W-2.
  • Effective for the calendar year 2015, if you provide self-insured health coverage to your employees, you must file an annual return reporting certain information for each employee you cover. The first of these reports must be filed in early 2016. Refer to the Q&As from IRS for more information. Also, if you self-insure, you may also be required to pay a fee to help fund the Patient- Centered Outcomes Research Trust Fund.

Some small business employers choose not to offer employer-sponsored health plans to their employees but instead offer to reimburse employees for premiums they pay for their individual health insurance. This is called an Employer Health Care Arrangement or Employer Payment Plans. There have been changing regulations around this type of arrangement, but generally these do not satisfy the employer requirements under the Affordable Care Act and may be subject to $100/day excise tax per applicable employee. You can find out more about Employer Payment Plans on the IRS FAQ page.

How can employers choose a SHOP plan?

As an employer, you can decide the coverage you want to offer your employees and decide how much you want to contribute towards their premiums.

The best way to do this is to login into a health insurance marketplace like or TrueCoverage, fill in the basic details about your organization and compare all the plans available side-by-side. You can offer more than one plan from multiple insurance providers or choose a single plan. It is important to find out your employees’ coverage needs and you need to have an idea of how many employees might participate. You may have to meet a minimum participation rate to buy coverage through the SHOP Marketplace.

When can you offer coverage to your employees?

You can offer coverage any time of the year.  This is  helpful when you take on new employees

Will I qualify for a tax credit?

ACA formulated what is known as the Small Business Healthcare Tax Credit to encourage businesses to provide health insurance coverage through SHOP. The tax credits can be up to 50% (up to 35% for tax-exempt employers) of your contribution towards premium costs. Employer’s contribution towards Health Savings Accounts and Flexible Savings Accounts cannot be included while calculating the tax credit amounts.

To qualify, you must:

  • Have fewer than 25 full-time equivalent employees (FTEs) making an average of $50,000 a year or less.
  • Pay at least 50% of your FTEs’ premium costs. To find out more and view a tax credit estimator, visit the IRS Small Business Resource page.

Employees often see greater value in being part of a group health insurance than in an equivalent pay increase. Talk to one of our consultants to develop the benefits package that suits your business and your employees’ best.