The Patient Protection and Affordable Care Act (PPAC) introduced the Small Business Health Options Program (SHOP) in 2008. The new PPAC provisions provided with the SHOP Act require states to create more affordable, accessible and predictable health care insurance options for small business owners and the self-employed. SHOP offers tax incentives to help states reform existing small group insurance policies by prohibiting ratings based on gender, health status ratings and claim histories. SHOP was signed into law in March 2010 and states are required to adhere to the new PPAC protocols by 2014.
Group Health Insurance
Regulated by the Department of Health and Human Services, SHOP will make it easier for small business owners to afford health insurance for their employees by offering them a list of private health insurance plans that are competing for business. Several small businesses can also team up to form a nationwide or statewide pool so they can spread the risk over a large number of insurance participants so health insurance premium rates lower. Business owners will receive an annual tax credit of $1,000 per employee, or $2,000 for family health coverage, if the employer pays for at least 60 percent of each employee's health care premium. Additionally, employers who pay more than 60 percent of employee premiums will receive an additional bonus tax credit.
More Affordable Premiums
Business owners will not face increased health insurance premiums through SHOP because the act will make it illegal for insurance companies to increase their premiums if an individual or employee has a preexisting condition or has made expensive insurance claims in the past. Additionally, business owners will find insurance premiums more predictable, stable and affordable, even if they employ older workers.
Health Care for Freelancers and the Self-Employed
Through SHOP, those who are self-employed, including freelancers, will be able to purchase health insurance from the same pool as small business owners so they no longer have to purchase private health insurance policies, which are often more costly. Additionally, SHOP will give those who are self-employed an annual tax credit of up to $1,800 for individual health insurance policies or $3,600 for family health policies.
More Choices
Employers and those who are self-employed will have the ability to visit SHOP's website, which will allow the professionals to compare several private health insurance plans at once. While SHOP allows for the possibility of new health plans to be offered all over the United States, state insurance commissioners will need to verify that new health plans conform to state requirements regarding network adequacy, the claims and appeal procedure and financial solvency.
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