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SHOP Employer and Employee Choice

The Covered California health insurance marketplace has been considering the extent to which employers and employees will have a choice of health plans and benefit designs in the SHOP Exchange. Covered California needs to ensure employees have meaningful choice while minimizing the potential for adverse selection both within the Exchange and between the Exchange and the broader insurance market.

Exchange Decision

The Covered California SHOP will start with Employer Choice of Tier and Employee Choice of Plan. That means the employer establishes the metal tier for all their employees and allows each employee to select among available health plans offered by multiple carriers. The employer may choose to offer plans at any one of the bronze, silver, gold or platinum levels.

The Covered California staff cited the following reasons for its decision:

  • Introduces a new offering not widely available in the current market. The unique product offerings in Employee Choice will enhance the Exchange’s appeal and ability to compete with the commercial market.
  • Delivers the best balance of employee choice and affordability.
  • Reflects policy that plans offered in the SHOP are expected to be offered at the same price for all small groups of 2-50 employees, and for all combinations of offerings.
  • Reflects independent actuarial counsel that this mix of offering would be likely to reflect the most affordable and least subject to adverse selection.
  • Helps initial launch to deliver a simple and friendly shopping and enrollment experience (communicating two or three choice options may be more complex to communicate to employers and employees).
  • Complies with the Affordable Care Act.

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