skip to content

About Reference Plans

One significant benefit to using SHOP is that it allows the small employer to offer multiple plan options and still manage their budget using a reference plan. If you offer more than one plan option, you must select one of them as your reference plan. It is this plan against which your contribution rate is applied.

When you contribute 50% of the cost of an employee's premium, you will pay 50% of the cost of the reference plan premium regardless of which plan the employee selects. If they select a less expensive plan, you will still pay 50% of the cost of the reference plan and the employee will pay the difference. If they select a more expensive plan, you still only pay 50% of the cost of the reference plan and they pay the difference.

When you offer more than one medical plan option, you must note your reference plan on the application. Reference plans do not apply to dental plans.

Example

You contribute 50% of the premium and offer three health plan options to your employees. For an employee of a specific age and tobacco use, the premiums are as follows. You select plan X as your reference plan.

  • Plan X: $300 premium (your selected reference plan)
    • If the employee chooses plan X, you will pay $150 (50%) and the employee will pay $150.
  • Plan Y: $200 premium
    • If the employee chooses plan Y, you will pay $150 (50% of the reference plan) and the employee will pay $50 (the difference between your $150 contribution and the cost of the premium).
  • Plan Z: $400 premium
    • If the employee chooses plan Z, you will pay $150 and the employee will pay $250 (50% of the reference plan plus the cost difference between Plans X and Z).
back to top