Reform Alert - News from the Blues' Office of National Health Reform

CMS releases SHOP final rule

Updated to previous alert from: June 26, 2014 SHOP Employee Choice

June 21, 2013

On May 31, the Centers for Medicare and Medicaid Services (CMS) released a Small Business Health Options Program (SHOP) final rule. The final rule restated the proposed rule issued earlier this year with no changes.

Employee Choice Transitional Policy

  • In 2014, federally facilitated SHOPs (includes partnerships like Michigan) will only allow qualified employers to offer one qualified health plan (QHP) and one stand alone dental plan to their employees.
  • In 2014, state-based SHOPs have the flexibility to allow employers to offer either one QHP or employee choice at a single metal level of coverage selected by the employer.
  • In 2015, all SHOPs must allow qualified employers to offer either one QHP or employee choice of any QHP at a single metal level. State-based SHOPs will have additional flexibility to offer employee choice beyond a single metal level of coverage.

Delay of Premium Aggregation

Because this function will not be necessary in 2014 for SHOPs that delay implementation of the employee choice model, the premium aggregation function is delayed until 2015 in Federally-facilitated SHOPs and is optional for 2014 in state-based SHOPs.

Special Enrollment Periods

The duration of certain special enrollment periods in the SHOP are now consistent with the group markets under HIPAA – 30 days.

The exception is when an employee or qualified dependent with coverage through the SHOP becomes eligible or loses eligibility for Medicaid or CHIP. This period is 60 days.

A dependent of a qualified employee is eligible for a special enrollment period only if the employer offers coverage to dependents.

SHOP Tying Provision

The Department of Health and Human Services (HHS) also stated that the SHOP tying provision, which requires insurers that participate on the Individual Marketplace plans must also sell products on the SHOP Marketplace, will continue to apply in the 2014 plan year. HHS will evaluate this provision to determine the general effect the standard is having on a state's small group market, specifically on employee choice in SHOPs. The tying provision in practice requires BCBSM and BCN to participate on the SHOP.

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The information in this document is based on preliminary review of the national health care reform legislation and is not intended to impart legal advice. The federal government continues to issue guidance on how the provisions of national health reform should be interpreted and applied. The impact of these reforms on individual situations may vary. This overview is intended as an educational tool only and does not replace a more rigorous review of the law’s applicability to individual circumstances and attendant legal counsel and should not be relied upon as legal or compliance advice. As required by US Treasury Regulations, we also inform you that any tax information contained in this communication is not intended to be used and cannot be used by any taxpayer to avoid penalties under the Internal Revenue Code.