SHOP stands for the Small Business Health Options Program, a part of the ACA Health Insurance Marketplace designed specifically for small employers (generally those with 1 to 50 employees) who want to offer health insurance to their workers.
Through SHOP, small business owners can compare and purchase group health insurance plans for their employees. In many states, SHOP plans are available year-round, not limited to an annual open enrollment window, making it easier for businesses to offer coverage whenever they're ready.
One of SHOP's key benefits is the Small Business Health Care Tax Credit. Businesses with fewer than 25 full-time equivalent employees, where the average annual wage is below a certain threshold, can claim a tax credit worth up to 50% of their premium contributions (35% for tax-exempt organizations), but only if they purchase coverage through SHOP.
The employer decides how much to contribute toward premiums and can choose to offer one plan for all employees or let employees pick from multiple plan options. Employees are not required to participate; those who decline can seek coverage elsewhere, including the individual Marketplace.
SHOP participation varies by state. Some states have active SHOP marketplaces with multiple plan options, while others have limited offerings. In states where SHOP options are thin, small businesses may find better group plan options through a licensed broker working directly with insurers.
If you're a small business owner exploring health coverage options for your team, SHOP is worth investigating alongside traditional group plans available through brokers.
If you offer SHOP coverage that's considered affordable and meets minimum value standards, your employees generally can't qualify for premium tax credits on the individual Marketplace. If your SHOP offer doesn't meet those standards, or you don't offer coverage at all, employees can shop individually and may qualify for subsidies.
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