Health Insurance Costs in small and large firms – a study

Small and large  firms vary substantially on health insurance offer
rates and costs.  Small firms are less likely to offer  coverage, and
there are important differences in the health benefits that small  and
larger firms offer.  Workers at small  firms are responsible for paying
both a larger share of family premiums as well  as higher cost sharing
than workers in large firms.  This Snapshot expands on information
presented in the 2012 Kaiser/HRET Survey of Employer-Sponsored Health
Benefits  to look exclusively at differences in offer rates, plan costs,
and cost sharing  between small firms and large firms.


We define “small firms” as employers with  three to 199 workers and
“large firms” as employers with 200 or more  workers.  While the vast
majority of businesses  in the United States are small businesses, the
majority of workers are employed  at large firms.  Of the over three
million firms with three or more workers, 98% have between three and 199
employees.  Small firms employ 39% of all  workers and 33% of workers
who receive health insurance through their own job.[1] Information on the Survey’s methodology can  be found in the 2012 Kaiser/HRET Employer Health Benefits Survey full report.[2]
Health  Insurance Offer and Coverage Rates

Small  firms are much less likely to offer health insurance than
large firms.  Of firms with 3 to 199 employees, 61% offer  health
insurance, a stark contrast to the 98% of firms with 200 or more
employees  that offer coverage to at least some of their employees.
Very small firms (3-9 workers) are least  likely to offer health
insurance to employees, with only 50% of these firms  offering coverage
in 2012.  Since most  firms in the country are small, the overall offer
rate is determined primarily  by the percentage of the smallest firms
(3-9 workers) offering health benefits.   Small firms may not offer
coverage for a  variety of reasons, including the inability to afford
premiums, employees may  be covered elsewhere, or the firm may feel that
the benefit does not impact  their ability to recruit and retain
qualified employees.[3] In 2012, 48% of small firms
not offering  coverage indicated that the cost of health insurance was
the primary reason  that they did not offer coverage. [4]




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