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Employer Eligibility Requirements

There are specific requirements for an employer to be eligible for a SHOP.

  • The employer's primary business location must be located in a SHOP’s service area (typically an entire state).
  • Coverage must be offered to all full-time employees.
    • Full-time is defined as working more than 30 hours per week.
  • The employer must have at least one eligible employee on payroll (generally excludes owners, including sole proprietors, and owners’ spouses and dependents on payroll).
  • The employer must have 50 or fewer full-time equivalent (FTE) employees on payroll in 2014:
    • The FF-SHOPs must determine size by using FTEs, a method which includes part-time but not seasonal employees who work fewer than 120 days per year.
    • While the FF-SHOPs must determine eligibility using the definitions above, State-based SHOP Marketplaces have flexibility in their counting approaches for 2014.

Additional employer qualification requirements.

  • Employers that are part of the same controlled group must count all employees at the combined entities when answering eligibility questions.

Employers must have at least one common-law employee.

  • Sole proprietors reporting on Schedule C cannot form a group health plan without having a common-law employee.
  • A group cannot consist solely of S corporation shareholders or spouses. (S corporations are corporations that pass corporate income, losses, deductions, and credit through to their shareholders for federal tax purposes.)
  • Under the common-law standard, an employer-employee relationship exists when the business for which the services are performed has the right to direct and control the worker who performs the services. It is not necessary that the business actually direct or control the manner in which the services are performed; it is sufficient if the business has the right to do so.

    Additional information on eligibility:

    • If a business grows beyond 50 FTE employees after 2014, that does not disqualify the employer for the SHOP.
    • Multi-state employers may establish one SHOP plan in the state/SHOP service area of the corporate headquarters. Alternatively, an employer can establish separate accounts in each state in which it operates. When separate accounts are established, information will not be shared across SHOPs.
    • Employers will not be reassessed for eligibility in SHOP until their annual renewal.

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