Despite the changes in the health insurance market resulting from the Affordable cost_of_careCare Act, large differences remain in the insurance coverage offered to employees at large and small firms, as well as in the out-of-pocket costs those employees will face.
These are among the findings of a study by the Kaiser Family Foundation. The study looked at the practices of “small” companies, which it defined as those with 3 to 199 workers, and “large” employers, with 200 or more.
While the vast majority of employers in the United States are small businesses, large firms actually employ the major share of the nation’s workers.
There are more than three million American companies that employ three or more workers. The overwhelming majority of these companies – 98% – have fewer than 200 employees. These “small” firms, however, employ only 38% of all workers.
Of these small firms, only 47% offered insurance coverage to their employees.
In contrast, the 2% of all companies that is made up of large employers employ 62% of the nation’s workers, and 98% of these large companies offer health benefits.
Small firms may choose not to offer coverage for a variety of reasons, the Kaiser study noted. These include the cost of premiums, employees obtaining coverage elsewhere, or the belief they will be able to recruit and retain qualified employees without offering the benefit.
In addition, with new options available to individuals under the ACA, some small firms may decide their employees will get a better deal on the health insurance exchanges.
Premiums for workers in large and small firms are not substantially different. Average premium for family coverage is actually lower in small firms than in large ones ($16,625 vs. $17,938 annually), and average premiums for single coverage are nearly the same. But the premiums appear to be buying less coverage for those employed by smaller companies, and those workers may have to pay a larger share of the premiums.
Workers in small firms with single coverage contribute less to their premiums than workers in large firms ($899 vs. $1,146). However, workers in small firms contribute 30% more for family coverage than workers in large firms ($5,904 vs. $4,549).
Even though workers at small firms enrolled in family coverage are covered by a plan with less expensive premiums than those at large firms ($16,625 vs. $17,983), they are responsible for a larger premium contribution than workers at large firms.
On average, workers employed at small firms pay 36% of their family premium, compare to the 25% that workers pay at large firms. In addition, 32% of workers in small firms contribute more than half of the premium for family coverage, compared to just 8% of workers in large firms.
The study also found differences between small and large firms in cost-sharing requirements. Among workers with deductibles, those in small firms generally have higher deductibles than workers in large firms.
About 63% of workers in small firms with single coverage are likely to have a deductible of at least $1,000, compared to just 39% of covered workers in large firms. Similarly, workers in small firms with single coverage are three times as likely to have a deductible of $2,000 or more compared to those in large firms (36% vs 12%).
The percentage of covered workers in plans with an annual deductible has increased significantly over the past few years, as have the average deductible amounts for workers in plans with deductibles.
In 2006, the average deductible for a worker with single coverage at a small firm was $775, compared to just $496 at a large firm. In 2015, average single-worker deductibles had soared to over $1,800 at small firms, and over $1,100 at large firms.
In 2006, the percentage of employees with deductibles was similar: 56% at small firms, and 54% at large ones. Today they are also similar, but far larger: 81% and 82%, respectively.
“Accessibility, affordability, and coverage of employer-sponsored health insurance vary greatly for small and large firms,” the report concludes. “The smallest firms are less than half as likely to offer coverage to their employees as are large firms…The lower offer rates combined with greater cost-sharing responsibilities for workers in small firms may limit the ability of small firms to attract and retain employees.”