Healthcare Insurance for Small Business Owners

Date: November 03, 2014 Last Edit: February 29, 2016

Health insurance products are as varied as those individuals and employers purchasing the insurance plan themselves. While seeking to expand coverage for small employers, it’s critical to understand who offers health insurance, what small employers spend and the value of services that are purchased. Available data shows that:

 
Health Insurance Basics
  • About 175 million non-elderly people are enrolled in a private health insurance plan.1
  • About 156 million non-elderly people are enrolled in an employer-sponsored health insurance plan.2
  • About 19 million non-elderly people are enrolled in a private health insurance plan purchased in the individual market.3
 
Health Insurance Offer Rates by Small Employers
  • Thirty-three (33) percent of small employers with less than 25 employees offer health insurance.4
  • Thirty-five (35) percent of small firms with less than 50 employees offer health insurance.5
  • Sixty-five (65) percent of small firms with less than 50 employees do not offer health insurance.6
  • Cost is a major reason for 65 percent of small employers not offering health insurance.7
 
Health Insurance Costs for Small Employers
  • Since 2004, the average annual family premium for covered employees in small firms increased 69 percent. Family coverage insurance premiums for small firms increased from $9,950 in 2003 to $16,834 in 2014.8
  • The average annual premiums for single coverage increased from $3,695 in 2003 to $6,025 in 2014.9
  • Small businesses, on average, pay about 18 percent more for health insurance than their larger counterparts for the same group of services.10
  • The cost of health insurance increased for 64 percent of offering small businesses last year, costs decreased for 6 percent.11
  • Sixty-six (66) percent of small businesses that experienced higher health insurance costs defrayed those costs through lower profits and 48 percent became more efficient/productive.
 
Shopped for Health Insurance
  • Fifty-five (55) percent of small employers who offer health insurance or shopped for a new plan or insurance carrier in the last year.13
  • Eighty-six (86) percent of small employers who offer health insurance or shopped for health insurance in the last three years discussed their options with an insurance agent or broker.14
  • Almost 80 percent of offering small employers purchase their health insurance through an agent or broker.15
 
Fully Funded Health Insurance Plans
  • Eight-seven (87) percent of offering small firms with less than 100 employees purchase health insurance in the fully insured market.16
  • About 2.1 million businesses only offer fully insured health plans to their employees.17
  • About 1.7 million small businesses with less than 100 employees only offer fully insured health plans to their employees.18
  • About 11 million employees who work for small businesses with less than 100 employees are enrolled in a fully funded employer-sponsored health insurance plan.19
  • About 22 million employees are enrolled in fully funded employer-sponsored health insurance plan.20
  • About 8 million people who are self-employed or work for a business with less than 100 employees are enrolled in a health insurance plan purchased in the individual market.21
 Affordable Care Act
  • Less than 20 percent of small business owners are “very familiar” with the healthcare law.22
  • About 40 percent of small business owners who are familiar with the healthcare law receive most of their information from the general news media.23
  • About 1/3 of small business owners are not confident that they will be in compliance with the healthcare law when it goes into effect.24
1 EBRI Databook, 2010.
2 Ibid.
3 Ibid.
4 Agency for Healthcare Research and Quality, Center for
Financing, Access and Cost Trends. 2013 Medical Expenditure
Panel Survey-Insurance Component.
5 Ibid.
6 Ibid.
7 Morrisey, Michael A., NFIB Small Business Poll series, Health
Insurance, Volume 3, Issue 4, 2003.
8 Kaiser/HRET Survey of Employer-Sponsored Health Benefits,
2014.
9 Ibid.
10 Commonwealth Fund, Benefit and Premiums in Job-Based
Insurance, May 2006.
11 Dennis, William J., Small Business’s Introduction to the Affordable Care
Act Part 1, NFIB Research Foundation, Washington, DC, October 2013.
13 Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2014.
14 Dennis, Williiam J., Purchasing Health Insurance, NFIB National Small Business
Poll series, Volume 7, Issue 3, 2007.
15 Dennis, William J., Small Business and Health Insurance: One Year After
Enactment of PPACA, NFIB Research Foundation, July 2011.
16 Agency for Healthcare Research and Quality, Center for
Financing, Access and Cost Trends. 2013 Medical Expenditure
Panel Survey-Insurance Component.
17 Ibid.
18 Ibid.
19 Ibid.
20 Ibid.
21 EBRI Databook, 2010.
22 Dennis, William J., Small Business’s Introduction to the Affordable Care Act Part 1,
NFIB Research Foundation, Washington, DC, October 2013.
23 Ibid.
24 Ibid.

 

 

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