Explaining the Health Insurance Penalty

Accountants and tax preparers complain that they have been put in the position of enforcing the Affordable Care Act’s insurance mandate without compensation or training as health insurance agents. They are absolutely correct and this system has produced in some bizarre results.

This was illustrated when one accountant wrote to me “I have clients that the insurance premiums are higher than what the penalty is….and even if the person used the insurance, the deductible is $3000. How do I convince someone to get insurance in that case?”

I responded:

Recognize that argument only makes logical sense under three conditions: a) you value the insurance at $0 or some other minimal amount,  b) your cash flow dictates that your goal is to minimize outflow, or, c) you have little to lose in terms of financial assets and future income that could be levied to pay medical claims. Certainly there are plenty of people that this applies to, however, my point is that in many cases the decision to go uninsured is not based on logic but perhaps emotion or ignorance instead.

We can conclude that the social purpose of a phased-in increasing penalty is to allow time for the public psyche to recognize and adjust to these thinking patterns, a process that takes years. But in the end, the only penalty that makes sense from a social policy perspective is one that exceeds the cost of compliance.

So it it not fair to criticize accountants for their lack of insight into the many aspects of health insurance – like these social policy issues and actuarial calculations in changing social behavior – that take insurance professionals decades to master. For now, I think that insurance executives should simply say “thank you for your volunteer services in helping sell our products”.

“How do I get health insurance?”

Countdown-to-get-covered

Perhaps I should not be so shocked that now only days before the close of 2016 open enrollment  season I am still receiving calls from individuals asking basic questions like “How do I get health insurance?”

This blog post is simply an outline of the telephone conversation that follows in this situation.

Our conversation starts with an explanation that I am not affiliated with a health insurance company or any government program*. I am an independent adviser offering telephone consultation only under the terms listed at OnlineNavigator.org who may be able to direct you to more useful resources. I presume that they have not been able to find resources in their local community which, frankly, would be far better than having this conversation with me.

Next we try to determine whether the caller is likely to benefit from a government premium subsidy . If so, then I direct them to the web site for their state insurance exchange. These state exchanges are listed at separately for each state at FreedomBenefits.net. It may be important to understand the differences between a private health insurance exchange that offers major medical insurance and a state-run insurance exchange. To make things simple I simply direct everyone who may qualify for a subsidy to the state exchange.

Most of my callers do not qualify for a premium subsidy (it is not clear why my callers tend to be skewed toward upper income individuals and non-citizens) so I direct them to the Members Insurance Exchange where I can more closely support the quoting and enrollment support resources.

The steps required are:

  1. Find a PC or tablet computer with a fast internet connection. (Smart phones are generally insufficient for insurance enrollment and often frustrate the process).
  2. If you’ve already left the web page where you found my phone number then go to my site FreedomBenefits.net to start. Browse the information and news by navigating to your state page or or directly to “Get a quote”.
  3. Enter the required information: name, email, date of birth and zip code for each person requesting coverage. Click through to the insurance listing in your zip code. The web site is set up to separate the minimum essential coverage policies (aka “Obamacare”) from the other types of health insurance policies. It seems that a larger than normal portion of my callers don’t want or don’t need the Obamacare plans. That might be a mistake, but I’m unlikely to convince many callers to change their mind.
  4. Select a plan by clicking “apply now”. This transfers you to the online application for the selected insurance company.
  5. At the end of the process you will receive one or more emails confirming the activity and application status. This email includes a link to a secure log in to update or continue your application, f necessary. The email also includes the telephone number of the member services office of the insurance company (if you applied).
  6. My contact information is available on each supported web site and email for follow-up questions.

Finally, it is important to recognize that the insurance choices that are available before February 1 are greater than the choices available after that date when open enrollment closes for the Obamacare plans. Unless special circumstances apply, only short-term and limited benefit dates are available after that date until the 2017 online enrollment season opens in November.

Happy last-minute online insurance enrollment!

*The web sites that I support contain a more complete disclosure/disclaimer statement on the bottom of each page. The OnlineNavigator.org web site has an “About Us” page that more completely explains my role.

“Watcha gonna do?” – Tax professionals look at ACA compliance

How should a tax preparer handle suspected ACA penalties for small businesses?

This post is inspired by the recent frustration expressed by an accountant who is a Facebook friend. My friend commented on one of my posts that even after a substantial investment of his time to learn and apply provisions of the Affordable Care act, he is still “beyond confused”. After reading a post about one IRS form required by some small businesses this year. exclaimed “This form is completely ridiculous! ” I don’t disagree, but I always return to the position that as tax professionals we must deal with the law as it exists, not as we think it should be.

The common scenario

Imagine that it is April 1, 2016 and you are in the heat of tax season preparing 2015 returns. A small business client comes in to your office. This small business has only two employees besides the owner and modest tax liabilities. The husband owns the business and the wife is an employee. They use a part-time office assistant. You are aware of the new ACA tax rules but since this client does not sponsor their own health plan, this should not be an issue, right? As you look at the 2015 business records and engage in the usual fact-finding conversation it becomes evident:

The business pays a bit each month to the employee for the cost of her health insurance coverage under her spouse’s employer-sponsored health plan. This seems smart because the cost is less than if your client sponsored their own health plan. Your client wants to know how to report this for tax purposes.

Since the wife is an employee, they reimburse the cost of family out-of-pocket medical expenses though their health reimbursement arrangement that an insurance broker helped set up years ago. After all, the client reminds you, that tax deduction was one of the main reasons they incorporated their business in the first place.

The problem

You’ve taken enough ACA training courses that an internal alarm goes off. You realize that the client might be exposed to ACA tax liabilities for at least three of these issues. They are not aware of a required Form 1095 informational tax filing and are already past the die date. More significant from a liability perspective it that the transactions could result in an excise tax liability now approaching $50,000. Furthermore, the deadlines for provisions to mitigate the tax penalties have already passed.

Your options

What are your options?

  1. You can properly prepare the tax return as you always do, reporting the facts properly as intended under the self-assessment penalty provisions of the ACA. Your tax software produces a Form 8928 for the first time that indicates an additional tax liability is due in the amount of tens of thousands of dollars more than last year. You know this is completely unrealistic for multiple reasons.
  2. You can ignore the issue altogether and produce a tax return that looks much like last year’s tax return. We’ve read stories about business owners and professionals who ignore tax issues. It never ends well.
  3. You can report the transactions in your tax preparation software in a manner to avoid having the software produce a Form 8928 that indicates the excise taxes. The words “preparer liability” are ringing in your head.
  4. You can only hope the client does not ask “Why didn’t you tell me about this earlier!?” or make assertions that they are not liable for taxes that they did not know about. This is the part that really gets your blood pressure up. You can feel it happening just reading this article.*

Obviously, none of these are good options.

A better option: isolate and insulate

I suggest there is a better alternative and this alternative is the core of my own professional practice.

Here it is:

You should seek to immediately isolate the potential ACA liability and insulate yourself from its potential impact on the good relationship you have with your tax client. You simply say “I think we might have an issue here with the new ACA rules. Let’s bring in a specialist to handle that issue and we’ll focus on the rest of your return”. Any further discussion on the topic at this point simply works against you.

I actually learned to use this strategy effectively in the 1990s and early 2000s working with insurance brokers who did not want to bear the brunt of their client’s complaints about health insurance and never-ending rate increases, claim denials, and cuts in coverage. It was better for them to offer me as a messenger of bad news about the health plan (as in “kill the messenger” marketplace mentality) rather than risk their own valuable reputation. By outsourcing the health plan issues to me, the brokers actually increased their own profitability by not having to spend time on these issues and avoiding client resentment. These clients simply did not associate their insurance broker with the “bad news” health plan.

Specific strategies will evolve

At this point there are too many unanswered questions about IRS enforcement of ACA penalties for small business to address specific options for penalty abatement and relief.

I’m sure that there will be more posts here to follow on strategies to deal with 2015 ACA penalty issues for small businesses. But this first concept is by far the most important and the most valuable: If you hope to remain as the trusted tax adviser, you do not want to deal with it.

*For more blood pressure raising information, see my annotated bibliography on related topics.

OnlineNavigator in 2016

For more than 30 years I’ve addressed consumer finance questions related to health insurance planning. It started as an effort to market my young financial planning practice in a local newspaper back in 1983 and is now an online social media activity through the trademark OnlineNavigator. I’ve lost count of how many thousands of consumer questions were addressed over this span. Most of this lifelong work has been uncompensated although I am paid for marketing through Freedom Benefits and occasionally for an article or presentation. Obviously the issues that affect Americans have changed over time. Yet it is clear that dealing with our national health care crisis continues to be a huge challenge to the people who contact me for advice. Lately the consumer questions tend to highlight the shortcomings of the Affordable Care Act. The real consumer question posted below is representative of the type of issue that I am asked about most often now in 2016.

Consumer’s question in early 2016:

“Hello. My name is xxxxxxxxxx. I was looking for health insurance for about 150 per month. I made 45000 last year, but I got laid off and I make significantly less now. I cannot afford the cheapest quote I was given at Healthcare.gov”

OnlineNavigator response:

Thanks for contacting OnlineNavigator service. Health insurance planning issues like yours are a common challenge for millions of Americans and this service is designed to give the most practical advice in an otherwise difficult and sometimes unmanageable situation.

As an immediate measure, some people who cannot afford qualified health insurance in the short-term opt for less expensive non-qualified insurance that costs less and covers less. For example, an emergency medical insurance plan cover only limited dollar coverage in an emergency room but might be quite affordable at around $20 per month. See the range of options available where you live by going to FreedomBenefits.net and selecting your state. My strong belief is that some coverage is better than no coverage even if this is not a complete solution.  In a period of personal financial crisis, it is important to focus on making sure that you don’t find yourself feeling “locked out” of the health care system in the event that you need care unexpectedly.

Pay special attention to limited benefit “short term medical insurance” that is specifically designed for people who are laid off and face a financial crisis as you describe. Another policy that has played a large role it “core health insurance”. Both of these are non-qualified plans that no not meet the standards commonly described as “Obamacare”. It makes sense to consider that health insurance is priced in direct proportion to the benefits that are paid out. There is no better example of “you get what you pay for” so a plan that costs only $150 per month as you suggest will not cover all of your potential medical expenses. All an individual can do is to match policies that are more likely to meet specific individual needs and that fall within an allotted budget.

For the longer term, however, all Americans need to consider that health care expenses will consume an average of 18% of your total household income. A myriad of laws are being phased in that are designed to make sure that everyone pays what government considers a “fair share”. That means that for a household with total annual income of $50,000 then the amount to be budgeted for health care is $675 per month. That is why your budget of $150 doesn’t come close to being adequate. The reality is that few people can afford this now and so that is why we have premium tax credits – at least for now. But even with the tax credits applied, as you indicated, millions of Americans cannot afford the premiums without major change to their lifestyle. For that reason consumer finance advisers like me work with individuals facing the shocking realization that they can’t continue to afford the basics of American life: rent, a car payment, a cable bill and health care. There is no doubt the out-of-control spiraling cost of health care is the #1 issue affecting your (and everyone else’s) future financial security. Eventually, over the long-term, as each of us pays more toward health care we will spend proportionally less on housing and other expenses.

Finally, you may also want to consider the ways to avoid a tax penalty during the period when you may be without qualified health insurance. That’s a different topic than what you asked and it won’t come up until you file your income tax return more than a year from now but see the OnlineNavigator article at http://www.onlinenavigator.org/Understanding-the-shared-responsibility-payment.html to consider this issue further. In your case it will likely take some work to avoid a tax penalty that would be $695 or more.

4980D Small Business Excise Tax Liability

This is the original submitted version of the article published by New Jersey CPA magazine under the same title in the January 2016 edition. The published version was slightly shortened to meet space requirements in the print publication.

Background

The Affordable Care Act adds Section 9815 to the Internal Revenue Code that requires employer-provided health plans to comply with a number of market reform provisions. IRS Notice 2013-54 explained that some of the most popular health benefit arrangements used by small businesses violate market reform provisions. The most common examples of non-compliance are an employer’s payment for individual health insurance or payment of health benefits that are not integrated with an employer-sponsored group health insurance plan.

Employer-paid health benefits for common law employees must now be: a) integrated with a qualified employer-sponsored group health insurance policy, b) benefits excepted by law, or c) subject to an excise tax penalty. There are exceptions for one person businesses, S-corporation shareholder employees, church plans, and union plans that are not covered in this article. The excise tax penalty for small business employers took effect on January 1, 2015. IRS Notice 2015-17 delayed enforcement of the excise penalty during a correction period that extended until June 30, 2015. Efforts by some members of Congress and the AICPA to repeal implementation of this potentially harsh penalty will not likely be granted for 2015, according to most sources at the time this article was submitted.

 

New Reporting Requirements

Excise taxes payable by a small business employer under IRC 4890D are self-reported on Form 8928, Part 2, that must be filed by the due date of the 2015 return, including extension.

There are two types of excise tax penalties: Section A – Failures Due to Reasonable Cause and Not to Willful Neglect and Section B – Failures Due to Willful Neglect or Otherwise Not Due to Reasonable Cause. The Section A penalty is a manageable 10% of the total amount paid for employee health benefits for affected employees. The Section B penalty is a potentially much greater $100 per employee per day excise tax.

This article does not address the determination of which excise tax penalty applies. We presume that for 2015 some affected employers will take the position that the failure was not discovered despite exercising reasonable diligence or was corrected within the correction period and was due to reasonable cause. If so, then the Section A penalty would apply for 2015. Little other guidance is available at this time.

How to recognize a penalty situation

Employers and their tax preparers should look for and address arrangements that may trigger an excise tax. Tax preparers should be on the lookout for these common warning signs that may indicate exposure to 4890D excise tax liability:

  1. Lack of health plan documents or document that have not been updated since before implementation of the Affordable Care Act.
  2. Commercially marketed “workaround” arrangements that use wording like “Section 105 plan”.
  3. Employer payments for individual health insurance premiums.
  4. Employer payments for health care expenses that are not administered together with the group health insurance policy.

 

Penalty relief

The IRS issued relief from this penalty to small business employers with non-compliant health plans for the first six months of the year (IRS Notice 2015-17), so the Section 4980D penalty would apply to health benefits beginning July 1 2015 through December 31, 2015. This means, for example, that if an employer made a payment to a single employee for health benefits of $300 per month for all of 2015 then the tax under Section A would only be $180 (10% of $300 x 6 months) but the tax under Section B would be $18,400 ($100 per day for 184 days). Without further guidance from the Service, it appears that in the most common types of small business health plan violation scenarios a strong statutory argument could be made for the more severe Section B penalty.

The Service has the statutory authority to grant penalty relief in this matter. Given the severity of the Section B penalty and its potential to even bankrupt some small employers, we presume that the Service may liberally concede to accept a Section A penalty from affected small business employers for 2015. However, once an employer claims an unintentional violation for 2015 and assumes the lower Section A penalty, it would appear to be unlikely that the employer could continue to claim that the very same violation was unintentional again on the 2016 tax return. For this reason, it may be urgent to correct the non-compliant provisions in the underlying health benefit plans that are triggering the excise tax as early as possible and certainly (hopefully) before the 2015 tax return filing date in early 2016.

Small business ACA compliance toolkit available for 2015

My firm Freedom Benefits offers a 2015 compliance toolkit to help small business employers who find themselves on the wrong side of 2015 ACA requirements. The tax penalties can be significant for the tens of thousands of firms affected. Equally important, IMO, is the need to effectively communicate the required changes to employees who are caught in the middle of this mess.

The small business toolkit consists of six documents ranging from sample employee notifications and email wording to a document describing a new after-tax ACA-compliant payroll payment arrangement for the allowable payroll voluntary reduction individual health insurance that is intended to minimize risks to the employer. The toolkit is meant for small business employers who:

a) have paid for or reimbursed individual health insurance through a Section 105 plan after 6/30/2015,
b) paid or reimbursed uninsured health expenses outside of an integrated group health insurance plan after 1/1/2015, or
c) offer a Flexible Spending Account with carry-over benefits from 2014 and an Health Savings Account in combination.

All three of these situations raise serious tax penalty risks for small business owners if left unaddressed before the 2015 tax filing deadlines this year (beginning with the February 1, 2016 deadline for filing W2 forms). Some penalties could be in the tens of thousands of dollars even for firms with a few employees.

We suspect there are at least tens of thousands of small firms that would immediately benefit from this but few small business firms or tax advisers are fully aware of the potential tax penalty impact of the current situation that I describe at http://tonynovak.com/cpa/index.php/2015/12/16/small-business-tax-changes-for-2015/ .

Right now the toolkit is available free of charge but only to firms that hire me for a remote flat fee consultation (http://tonynovak.com/flat-fee-for-tony-novak-cpa.html ). I recognize this is not a great marketing strategy for a valuable tool like this and so I am looking for better options.

Request to readers: If you know of anyone that would have an interest in incorporating or promoting this toolkit/service, please consider passing on this blog post in hopes of sparking a conversation.

 

ACA – The law that really wasn’t

The Affordable Care Act (ACA) of 2010 really hasn’t had any significant impact on individuals and small businesses despite the volumes of  information, rhetoric and threats of penalties for non-compliance. Today the Obama administration extended the individual health insurance enrollment deadline (again) regarding the individual mandate. Last week they postponed the effective deadline for small business compliance under Internal Revenue Code section 4890. These extensions follow a long string of previous extensions or repeals on almost every part of the ACA where direct taxpayer compliance is required. It’s not surprising, then, that fewer people take the law seriously anymore.

I’m not suggesting that the lack of enforcement is a bad thing. But what I am concerned about it that business owners and their advisers no longer give credibility to the federal government or the intent of ACA.

In my own practice, I just don’t know what advice I should provide. Should I tell clients “this is what the law says but they’ve not enforced it so far and you are likely one of almost a million small businesses who are not in compliance”? Privately some CPAs have told me – and some have even written in public forums – that they don’t even bother to warn clients of the impact of ACA due to this underlying lack of credibility.

I conclude that a law that changes week by week really is not a law.

Disagreements about taxation of individual health insurance in 2014

It seems that the most confusing tax topic this year in the wake of the Affordable Care Act implementation is the taxation of individual health insurance when an employer is involved in the payment of the cost. No doubt other confusing issues are still on the horizon, but this one is here and now. Small business clients seeking an answer now are sometimes met with conflicting opinions on the issue.

The legal community has been equivocal on its position against the use of individual insurance as an employer paid expense in 2014. Meanwhile, CPAs have been noticeably quiet on the topic after issuance of Internal Revenue Bulletin 2013-40. My take is that accountants are still trying to take it all in, and certainly there are many nuances to consider before forming an opinion. This blog post is meant to break that silence among accountants and perhaps stir some more discussion.

What others are saying

Here is a summary of some of the better-written commentary:

Angela Bohmann, an attorney with Stinson Leonard Street writes in her blog post “Employers were hoping that by providing funds to employees to purchase coverage on the individual market, the employer could avoid the penalty for failure to offer coverage while limiting the employer’s cost. In recently issued guidance, the IRS and the Department of Labor have essentially said no to this alternative.” (emphasis added) Note that Ms. Bohmann hedges her statement, much like I did in my article on the same topic, based on independent research. Her article also reaches the same conclusions on some other points: “The IRS did not revoke the 1961 Revenue Ruling permitting pre-tax payment of employee premiums for individual market policies.  Some employers are hoping that they can continue to allow employees to pay for individual market health insurance policies on a pre-tax basis through a cafeteria plan even if the employer provides no subsidy for the coverage.  The recent guidance is not clear on that point.” (emphasis added)

Law firm Alston and Bird LLP publishes a well-written opinion on the impact of ACA on individual health insurance. The author is not identified. Their conclusion is stated: “Thus, the Agency Guidance (referring to IRS Notice 2013-54 and Technical Release 2013-03) indicates that any arrangement that provides for the purchase of IM Coverage on a pre-tax basis will fail PHSA Sections 2711 and/or 2713.” (emphasis added) I am not convinced by Alston’s summary conclusion. The author takes a giant leap from the guidance’s lengthy discussion of disallowed reimbursement plans to saying “any plan” without a discussion of other possible arrangements that might fall into the category of “employer payment plan” and not fall into the category of reimbursement plan. An example is presented below in the one employee corporation situation.

The insurance brokerage firm Parker Smith Feek states “The DOL recently issued Technical Release 2013-03 which answers a question that has been unclear since the Affordable Care Act (ACA) was passed. Can employers pay for the purchase of individual health insurance plans for employees on a tax-free basis? The DOL’s answer to this question is no.  emphasis added. We should be generally skeptical of posts be the employee benefits industry because of their financial addiction to group health insurance commissions.

Likewise, firms that sell software and individual health insurance exchange support services like Zane Benefits have the opposite financial interests and are among the strongest proponents of the use of individual health insurance in employer-paid situations. I avoid specific citations of Zane Benefits statements.

Getting to the heart of the issue

The IRS logic in the 2013 guidance is based on the assumption that employer payments are part of a qualified employee benefit plan and all of the published guidance focuses on various types of qualified employee health benefit plans. We might borrow concepts learned from the estate tax planning field where it is common to deliberately fail to meet a code section laid out in the tax code in order to default into different and more desirable tax treatment.

The one person corporation example

Theorems may be best tested by consideration of an example that defies the principle. For that purpose, consider the case of a one employee “C” corporation. This employer is bared from the group health insurance market (in most states) by virtue of the single employee. Most states consider a one person business to be a candidate for individual insurance, with two employees the minimum for a group health insurance plan. The employee is not eligible to claim a self-employment health insurance deduction. None of these fact patterns changed with the implementation of the Affordable Care Act; one person “C” corporations are well-accustomed to reporting health benefits as a non-taxable benefit to the employee. Was this meant to change with implementation of the Affordable Care Act? There is no indication whatsoever in the new guidance that this business cannot continue to deduct the cost of insurance for this employee. Of greater interest, there is no guidance stating that insurance purchased by this business outside of an employee benefit plan is taxable to the employee. Should we now conclude that every payment of health insurance by corporations with one employee are now taxable to the employee? I suspect that a CPA is warranted and has reasonable basis to not change the tax treatment of this transaction for 2014 in the absence of further guidance from the Service.

Audit consideration approach

Accountants sometimes consider a tax position in terms of the audit procedures and legal procedures that might be used to challenge a specific tax position. While audit procedures do not determine the law, and I’m not suggesting “do it if you think you’ll get away with it”, the consideration of audit procedures does help clarify the step-by-step application of the law and testing logic that might be used to interpret the law in questionable situations.

In this case, the validity of the business deduction for an insurance payment for individual health insurance might be questioned in a full audit of the company. I am not aware of any basis upon which the deduction might be challenged if paid on behalf of a legitimate employee. The second step would be to consider the tax withholding and treatment. The basis for which IRS might assert taxes would be to claim that the payment was part of an “employer-sponsored employee health benefit plan”. It seems less likely that the Service would assert this to be a “group health plan”. By the services’ own requirements an employer-sponsored health benefit plan must be in writing. In the example proposed we presume that there is no written employee benefit plan. From a technical perspective, we could argue that any attempt to form a qualified employee benefit plan was defeated by failure to meet documentation requirements. What we are left with in this theoretical audit example is a check written by an employer that is or is not taxable compensation to the employee. Given the current language of the law and recent guidance, it is my opinion that any tax court would find it difficult to conclude that the payment amount is taxable to the employee.

Conclusion

My conclusion is that we are likely to receive more guidance from Treasury Department on this issue. Common sense and experience tells me that guidance is more likely to be influenced by the political climate in the future rather than technical explanation of prior positions.

 

Where is small business health insurance headed?

This article was written for 2014 and then updated for 2017. Little has changed. These points are still not well understood or agreed upon by professionals in the small business health insurance field:

Quality of information: Most of the information published in this field appears to comes from those with a vested economic interest and/or political agendas. Terms like “may qualify” or “could enroll” dominate the reports. Little actual data is available. Even government data sometimes appears suspect. As a result, it is difficult to get to the truth of trends in small business health insurance.

Qualifying for tax credit: HHS says up to 4 million small businesses may qualify for a tax credit if they provide health insurance. Inc. Magazine says the number is actually about half of that at about 2.1 million. Presuming that median size of this population is between 1 and 2 employees (per U.S. census data), then the number of people affected by this issue is around 3 million. Deloitte says that 6 million to 13 million people could enroll through SHOP by 2021 but does not project what portion may qualify for the tax credit. The large majority insurance industry sources say few or none of their small businesses actually qualify for the credit. IRS says that is will audit claims for credit but has not published results so far. As a result, no data is available on whether any firms actually qualified for the credit that became available for 2010 and subsequent years.

Advantages of SHOP: There are two primary potential advantages of using the Small Business Health Options Program (SHOP): 1) eligibility for employer tax credits, 2) built-in employee choice. Employee choice does not apply in PA or NJ for 2015.

Disadvantages of SHOP: The primary advantages of not using SHOP are: 1) wider range of choices, 2) better service.

SHOP vs. private exchanges: In the few states reporting SHOP enrollments (not PA or NJ), results are poor so far. Private insurance exchange growth is clearly booming with plenty of investment capital, technological innovation and fewer regulatory boundaries. As a result, SHOP is lagging and private exchanges are booming.

Online exchanges vs. traditional enrollment: The large majority if small businesses are using traditional enrollment (physical work-site) methods rather than an online self-serve exchange.

Individual vs. Group insurance: There is still a strong belief among industry sources that individual exchanges are better choice for the majority of small businesses. This conclusion appears to be gaining traction in mid-2014. Plenty of hypothetical comparisons are published but no actual data is available to actually verify this opinion. Predictions of imminent demise of the small business group insurance market are unsubstantiated.

Diversity of opinion: There is agreement are clear that “one size does not fit all” with regard to insurance advice and that there are exceptions to every trend point listed here.