Premium Allocation and Employer Contribution Strategies for SHOP

This brief, prepared by Wakely Consulting Group, analyzes different options for premium rating methods for the Small Business Health Options Program (SHOP) Exchange.  The details of the billing/employer contribution approaches are explored and insights are given into the benefits and challenges of each method.  A key challenge in promoting employee choice in the SHOP is developing premium rating methods that do not discriminate against older employees, but that will support (a) employee choice of health plans based on value (including premiums), (b) a defined employer contribution, (c) a fair allocation of premiums among issuers, and (d) a premium invoice which employers can understand. This brief explores six options that SHOP exchanges can consider for resolving these issues.