Some small business owners are choosing alternative health insurance options over the government sponsored exchanges (operating under the Small Business Health Options Program, or SHOP). Business owners and health insurance brokers are citing a number of reasons for this current trend, including limited federal tax credits and a small menu of insurance offerings (which is a particularly pressing issue in certain states). The under-participation of small businesses in the health exchanges stands in sharp contrast to the health marketplace for individuals, which has really taken off.

Under the SHOP program, small business owners are able to qualify for tax credits worth up to 50 percent of their contribution toward their employees’ premium costs. However, to qualify for this tax break, the firm must employ fewer than 25 employees with average annual salaries of $50,000 or less. In addition, small businesses that do qualify are reporting that applying for the tax credits was a lot of work and that the monetary award was minimal and essentially “not worth it.” This is compounded by the limited variety of options available on the exchange in many states. Offerings vary from state to state, and can be slim; for instance, small firms in St. Louis, Missouri, have access to only one carrier, which provides very little impetus for them to even look into this particular option.

The U.S. Department of Health and Human Services remains optimistic, reporting that they expect that SHOP participation will grow with time. Experts concur that if the tax credit becomes more robust, this will drive participation numbers.

Under the Small Business Health Options Program, small businesses in 33 states (including Delaware, Georgia, and Missouri) where SHOP exchanges are federally operated have since November 15 been able to buy coverage through the Affordable Care Act’s online insurance enrollment site An additional 17 other states and the District of Columbia operate their own SHOP marketplaces on a state level.


Janofsky, Adam. “Small Businesses Snub Health Exchanges for Coverage: Owners, Brokers Blame Limited Federal Tax Credits and Small Menu of Offerings.” The Wall Street Journal. 1/7/15.