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California’s SHOP is Open for Business

Pictured above: Tyler (left), Liz and Steve Parker in front of their Tulsa Ribs Restaurant in Orange, Calif.

SAN FRANCISCO -- Liz Parker, owner of Tulsa Ribs Restaurant, lauded yesterday’s announcement that the state’s online health insurance exchange will now offer California small business owners like herself a choice of affordable health insurance plans for their employees, and be rewarded for it with tax breaks.

Even though the Obama administration announced last week that small businesses that planned to enroll their employees through the federal online exchange’s Small Business Health Options Program (SHOP), created under the Affordable Care Act (ACA), would not be able to do so until next November because of the glitches faced by, the federal online insurance exchange, California’s own SHOP program opened for business yesterday on its marketplace exchange called Covered California. This means, coverage for small business employees could begin as early as December 1.

SHOP was meant to give small businesses a simpler and more efficient way to buy insurance coverage for their workers, with the online marketplace standing in for a broker, if need be.

“Small businesses now have new options to provide more choice for their employees and new affordable options for their business,” said Peter V. Lee, executive director of Covered California. California, he said, has “hundreds of thousands” of small businesses.

Small businesses in the rest of the country will still have the option to purchase SHOP health insurance plans through a broker or agent, who will assist the employer with filing a paper application.

Parker of Tulsa Ribs said she’s been providing comprehensive health insurance for her employees since the day she and her husband, Steve, opened their restaurant in Orange, Calif., 33 years ago. She said she pays the full cost of premiums for the 16 full-time employees currently on payroll, and half the cost of the premiums for the 28 part-timers, for a total of about $73,000 a year. Even when premiums went up by 25 percent between 2009 and 2010, and even when business dropped during the recession, she continued providing them health care, but had to modify the policies so employees co-pays went up some.

“We realized that if we take good care of them they’ll stay with us,” a belief, she said, that has been borne out. “On average, our employees have been with our company for 20 years.”

Many small business owners could qualify for a federal tax credit to help offset contributions toward employee premiums, provided they buy insurance through SHOP and have fewer than 25 full-time employees, whose annual salary is under $50,000, Lee said. Employers would also have to contribute at least 50 percent of their employees’ premium cost.

Employers with 10 or fewer full-time employees, with wages averaging $25,000 or less per year, are eligible for the maximum amount of tax credits.

Small businesses, unlike large businesses, are not required to buy insurance for their employees. They will not be penalized for non-participation, and they can enroll in a SHOP plan all year round.

Parker said that in 2010, when the Affordable Care Act (ACA) was signed into law, her accountant tried to get her business a federal tax credit but couldn’t, even though they believed they met all the criteria under the law. The Internal Revenue Service told them they qualified for no more than a $6 refund.

She said she is especially thankful that Covered California has certified some 22,000 agents to sell Covered California products, with 7,000 of them trained to help small businesses navigate the online marketplace and choose the best insurance company from among the six who are currently on the SHOP network: Blue Shield of California, Kaiser Permanente, Sharp Health Plan, Chinese Community Health Plan, Health Net and Western Health Advantage.

Lee said he encourages all businesses to use the help of a navigator since choosing the right option “could be complex.”

Parker would be the first to agree. Even prior to ACA, “the whole system was hellacious, expensive and complicated,” she asserted, noting that that’s why many small businesses stopped buying insurance for their employees.

“Having trained navigators will take a huge burden off of me and relieve me of having to make decisions,” she said, adding: “I can make great ribs, but I don’t understand the insurance market.”

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