Md. Code Regs. 14.35.18.03

Current through Register Vol. 51, No. 24, December 2, 2024

Section 14.35.18.03 - Eligibility for SHOP Exchange

A. Nondiscrimination. No policy shall exclude a qualified employee or dependent on the basis of age, sex, sexual orientation, gender identity, occupation, actual or expected health condition, claims experience, duration of coverage, or medical condition.

B. SHOP Exchange Employer Eligibility.

(1) An employer is eligible to purchase insurance on the SHOP Exchange if it meets the following requirements as established by Insurance Article, § 31-101(aa), Annotated Code of Maryland:

(a) Has, on average, 50 or fewer employees during the preceding calender year;

(b) Has at least one full-time employee who is not the spouse or other dependent of the owner;

(c) Has its principal place of business in Maryland;

(d) Elects to offer, at a minimum, all full-time employees coverage in a qualified health plan through the SHOP Exchange; and

(e) Either:

(i) Elects to provide coverage through the SHOP to all eligible employees, wherever employed; or

(ii) Elects to provide coverage through the SHOP to all of its eligible employees who are principally employed in Maryland.

(2) For the purpose of determining the number of qualified employees, a business shall be considered to be one qualified small business or group if:

(a) It is eligible to file a combined tax return for purpose of State taxation; or

(b) It comprises two or more companies that are part of the same parent-subsidiary controlled group, as defined by 26 CFR § 1.1563-1(a) (2).

C. New Employers. An employer that was not in existence for the entirety of the preceding calendar year shall have eligibility determined as established by Insurance Article, § 31-101, Annotated Code of Maryland.

D. Eligibility Application. All qualified small businesses shall submit an eligibility application in accordance with relevant provisions of 45 CFR § 155.716.

E. Duration of Eligibility. A determination of an employer's eligibility to participate in SHOP remains valid until the employer makes a change that could end its eligibility under 45 CFR § 155.710(b), or until the employer withdraws from participation in the SHOP.

F. Eligible Employee.

(1) Full-time common law employees are eligible for SHOP participation.

(2) An employer who elects to cover part-time and seasonal employees working more than 120 days per year shall calculate full-time equivalency of the employee's hours by:

(a) Calculating the total number of hours worked by all part-time and seasonal employees per month; and

(b) Dividing the total number of hours worked by 120.

G Groups with Non-Common Law Employees. The following groups are eligible for SHOP participation if at least one common law full-time employee is also employed and elects to enroll in SHOP coverage:

(1) A corporate partner;

(2) An S corporation shareholder with more than 2 percent ownership;

(3) A business that employs contractual 1099 employees; and

(4) A sole proprietor.

H. Household Employers. A household employer is eligible for SHOP participation, under the following conditions:

(1) Relevant eligibility requirements pursuant to this regulation are met; and

(2) The employer has filed, or will file for the subsequent tax year, an appropriate Schedule H (Form 1040) or Form 941 demonstrating that a household employee is employed, and all appropriate taxes have been paid or withheld.

I. Minimum Participation. A qualified employer shall meet the following minimum participation requirements:

(1) At least 60 percent minimum participation is required for qualified employers; and

(2) Minimum participation is determined prior to initial plan enrollment, and annually prior to plan renewal.

J. Participation Determination. In applying a minimum participation requirement to determine whether the applicable percentage of participation is met, a carrier may not consider as eligible employees:

(1) Employees who are enrolled in coverage through another group health plan, governmental coverage (such as Medicare, medicaid or TRICARE), coverage sold through the individual market, or other minimum essential coverage; or

(2) Employees who are under the age of 26 years who are covered under their parent's health benefit plan.

K. Waiver of Minimum Participation Period. Small employers that cannot comply with minimum participation requirements may apply for coverage during the period that begins on November 15 and extends through December 15 of any year.

L. Determination Outcomes.

(1) A group shall be enrolled once it has been determined that the group satisfied the minimum participation requirement.

(2) If a group becomes enrolled as the result of an error in computing participation level, enrollment shall continue until the end of the month following the month in which a termination notice is sent.

(3) The determination of an employer's eligibility to participate in the SHOP remains valid until the employer makes a change that ends or alters its eligibility, or the employer withdraws from participation in the SHOP.

M. Eligibility Redetermination.

(1) The SHOP Exchange may request new eligibility applications from employers in order to conduct eligibility redetermination.

(2) Requests shall be made by the SHOP Exchange no later than 60 prior to the employer's renewal date.

N. Eligibility Adjustment Period. When information submitted on the SHOP single employer application is inconsistent with information collected from third-party data sources through the verification process or otherwise received by the SHOP Exchange, the SHOP Exchange shall:

(1) Make a reasonable effort to identify and address any causes of typographical errors or clerical errors;

(2) Notify the employer of the inconsistency;

(3) Provide the employer with a period of 30 days from the date the notice is sent, to present satisfactory documentary evidence to support the employer's application, or resolved the inconsistency; and

(4) If after the 30-day period described in §N(3) of this regulation the SHOP Exchange has not received satisfactory documentary evidence:

(a) Notify the employer of its denial or termination of eligibility and of the employer's right to appeal such determination; and

(b) If the employer was enrolled pending the confirmation or verification of eligibility information, discontinue the employer's participation in the SHOP at the end of the month following the month in which the ineligibility notice is sent.

O. Employer Eligibility Appeal.

(1) An employer has the right to appeal:

(a) A notice of denial or termination of eligibility; and

(b) A failure by the SHOP Exchange to provide a timely eligibility determination or a timely notice of an eligibility determination.

(2) All appeals shall be requested within 90 days from the date of the notice of denial or termination of eligibility.

(3) The SHOP Exchange shall provide a written notice of the right to appeal a denial of eligibility which includes:

(a) The reason for the denial or termination of eligibility, including a citation to the applicable regulations; and

(b) The procedure by which the employer may request an appeal of the denial or termination of eligibility.

(4) The SHOP Exchange shall issue written notice of the appeal decision to the employer within 90 days of the date the appeal request is received.

(5) If an employer is found eligible following the appeal decision, then, at the employer's option, the effective date of coverage or enrollment through the SHOP Exchange under the decision is:

(a) Retroactive to the effective date of coverage or enrollment through the SHOP Exchange that the employer would have had if the employer had been correctly determined eligible; or

(b) Prospective to the first day of the month following the date of the notice of the appeal decision.

(6) If the employer is found ineligible under the appeal decision, then the appeal decision is effective as of the date of the notice of the appeal decision.

P. Safe Harbor. The SHOP Exchange and participating carriers shall treat a qualified small business which ceases to be eligible solely by reason of an increase in the number of employees, as an eligible small business until it otherwise fails to meet the eligibility criteria of this section, or it elects to terminate coverage for qualified employees through the SHOP Exchange.

Q. Reporting. Employers shall submit a new application within 30 days of any change made to the business structure that could alter its SHOP Exchange eligibility.

Md. Code Regs. 14.35.18.03

Regulation .03 adopted effective 46:22 Md. R. 976, eff. 11/4/2019; amended effective 51:22 Md. R. 957-1028, eff. 11/11/2024.