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N.J.’s small businesses get early access to Obamacare health plan exchange — but will they use it?

(Editor’s Note: This story was most recently updated at 8:55 a.m. Friday with comments from Joel Cantor, director of the Rutgers Center for State Health Policy.)

New Jersey is one of five states where small employers will get early access next month to the online SHOP exchange at HealthCare.gov, where they can choose a health plan that provides government subsidies to help them defray the high cost of providing health insurance to their workers.


But since key obstacles that limited the 2014 SHOP rollout will still be in place, it remains to be seen if more small employers will use SHOP to buy their 2015 health coverage, experts said.

Open enrollment begins online Nov. 15 at HealthCare.gov for both small employers and individuals looking to buy subsidized health insurance under the Affordable Care Act.

However, New Jersey’s small employers with fewer than 50 workers, as well as small employers in Delaware, Illinois, Missouri and Ohio, will be able to go online and begin their SHOP application process sometime in late October. The announcement this week of this new “early access” option from the federal Department of Health and Human Services didn’t give a specific date in October when this will happen.

Linda Schwimmer, vice president of the New Jersey Health Care Quality Institute, said the HHS early access program “is a good opportunity for New Jersey employers and brokers to try it out before open enrollment starts. It was smart to pick New Jersey, because we have a 20-year history of a robust small employer market.”

Ward Sanders, president of the New Jersey Association of Health Plans, also said New Jersey was a good choice for the HHS early access program, since the state “has had standardized products and other elements of reform for years. It is probably a good pick for early access. If successful, it will add another tool to assist consumers in shopping for coverage, and that’s a good thing.”

HHS said that, as an “early access” state, New Jersey’s small employers will be able to use HealthCare.gov to create an account; designate an insurance agent or broker; complete an eligibility application; obtain an eligibility determination from the SHOP exchange; and upload their employee roster. But employers won’t be able to start browsing SHOP plans and prices until they become available in November.

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Meanwhile, SHOP, or the “Small Business Health Options Program,” has gotten off to a slow start in New Jersey and nationwide.

Erik Rettig, Northeast outreach manager for the Small Business Majority, a small business research and advocacy organization, said SHOP is not battling a popularity problem, but a lack of knowledge.

“New Jersey small employers for the most part are unaware of SHOP,” he said. “We’ve seen some interest in the New Jersey nonprofit community in SHOP enrollment, and I anticipate as SHOP becomes more accessible more folks will take advantage of it. “

While millions of individuals were able to go on online to HealthCare.gov to buy 2014 health insurance policies, small employers who wanted to use SHOP had to compete much of the 2014 application process on paper.

And for small employers, their choice of a 2014 health plan on SHOP was severely limited: the employer was required to choose a single plan from one insurance carrier to cover all of its workers.

That one-plan restriction will remain in place when open enrollment begins for 2015 coverage. It’s a sharp contrast to the shopping experience of the more than 160,000 New Jerseyans who bought individual coverage on HealthCare.gov. In 2014, individuals were able to choose among dozens of different plans from three insurers: Horizon Blue Cross Blue Shield of New Jersey; AmeriHealth New Jersey; and Health Republic Insurance of New Jersey.

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In June, the state Department of Banking and Insurance announced that it would delay until 2016 the full rollout of the SHOP exchange in New Jersey. Thus, small employers will have to wait until 2016 to be able to choose from a broad menu of SHOP health plans offered by several insurers.

Insurance broker David Oscar with Altigro said the fact that employers are limited to just one health plan remains a major issue. In the state’s traditional small group health insurance market, which operates outside SHOP, employers can choose from dozens of health plans from multiple carriers.

“My prediction is that, until there is greater choice of different plan design options through the SHOP, employers will stay in the state-run small employer market,” Schwimmer added.

At least this year, instead of a paper application, small employers in New Jersey will be able to apply online for SHOP health plans taking effect in 2015.

Oscar said none of his clients used SHOP for 2014. He said enabling small employers to go online for SHOP this time around, instead of using a paper application, would be an improvement.

“Our expectation is that the five states that are getting an early view of SHOP will be able to go online and enroll small employers onto SHOP,” Oscar said.

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“I’m hoping it will help” to move the SHOP process to an online system, he added. “So far, the brokers have been very successful in helping individuals” purchase coverage at HealthCare.gov. “So I’m hoping that we’ll be very successful in helping with SHOP.”

Small employers must purchase their health plans on SHOP in order to receive federal subsidies. Employers are eligible for subsidies if they have fewer than 25 employees, with an average wage of less than $50,000. The employer must pay at least half the cost of the employees’ health insurance, and the subsidies are on a sliding scale, covering up to 50 percent of what the employer pays for the employees’ health insurance.

Oscar warned, though, that many small New Jersey don’t quality for subsidies through SHOP because their average employee wages exceed $50,000.

Sanders noted that eligibility for financial subsidies under the ACA requires a small employer to purchase through the SHOP and an individual to purchase on the Marketplace. “But the SHOP will likely see less activity than the individual Marketplace for a simple reason: The eligibility for the premium subsidies for individuals affects a lot of individuals, while eligibility for the Small Business Health Care Tax Credit is rather limited. Without the subsidy business, I wouldn’t anticipate a lot of business on the SHOP, at least initially.”

Christine Stearns, vice president of the New Jersey Business & Industry Association, thinks it’s interesting that New Jersey was chosen to be among the five states that will pilot the HHS “early access” program.

“So far, there has not been a lot of interest in the SHOP from N.J. employers,” she said. “Additional time may entice more employers to explore the SHOP who so far have been skeptical.”

Ray Castro of New Jersey Policy Perspective added: “New Jersey  is very fortunate to have been selected as a demonstration project for SHOP.

“One of the biggest challenges in the Affordable Care Act will be to show that the SHOP can result in making quality insurance more affordable and accessible for small employers,” he said. “It remains to be seen whether the limited tax credits, pooling of employers and online services provided in SHOP will be sufficient to meet that goal, but that is the expectation. The federal government was smart to do this on a demonstration basis first before rolling out the changes nationally to avoid many of the administrative problems that occurred in the marketplace. The state is now well positioned to influence the final design of the SHOP, which will make it more likely that it will benefit New Jersey businesses and their employees. ”

Joel Cantor, director of the Rutgers Center for State Health Policy, said piloting the SHOP is a good idea and he wasn’t surprised that New Jersey was one of the states selected: “We have had a well-structured market with robust choice since well before the ACA.  If it functions well, the SHOP will add a nice opportunity for employers to comparison shop.”