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Hawaii Granted Waiver to Discontinue Operation of SHOP Marketplace

Waiver Impacts Employers’ Small Business Health Care Tax Credit Eligibility

The U.S Departments of Health and Human Services and Treasury have approved the State of Hawaii’s application for a waiver from the Affordable Care Act (ACA) requirement that it operate a Small Business Health Options Program (SHOP) Marketplace. The waiver is effective from January 1, 2017 through December 31, 2021.

Background
Section 1332 of the ACA permits a state to apply for a “State Innovation Waiver” to pursue innovative strategies for providing its residents with access to quality health care, as long as the plan meets certain requirements to retain the basic protections of the ACA. State Innovation Waivers are available beginning January 1, 2017—Hawaii is the first state to have such a waiver approved. The waivers are approved for five-year periods and can be renewed.

Small Business Health Care Tax Credit Eligibility Implications
Because providing SHOP-based coverage is one of the requirements for receiving the Small Business Health Care Tax Credit, the approved waiver will prevent small employers in Hawaii from being eligible for the credit. Credit amounts that would otherwise be paid to small employers in the state will be provided as a pass-through payment to the state, which will be used primarily to support a state fund that helps small businesses cover their health care costs.

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