KFF found that, on average, employers in 2017 covered 82% of employees’ self-only plans and 73% of family plans; this amount can differ depending on company size.
Small firms usually cover more of the employees’ premiums; 31% of covered workers at these organizations pay less than half their family premiums.
What Does It Mean?
Employer coverage of health benefits varies significantly by firm size and type; for instance, almost all firms with more than 1,000 employees provide full or most coverage, but only 49% of small businesses with three to nine workers do so. Furthermore, coverage by employer-sponsored plans also depends on their type; some plans offer low deductibles while others require workers to cover out-of-pocket expenses such as copayments before insurance kicks in.
Employer-sponsored health coverage was the most prevalent form of coverage among working-age adults in 2022, accounting for 54.5%. Other forms include private individual/family policies, Medicare/Obamacare plans and employer sponsored group policies.
While the share of workers with health insurance through their employer has steadily increased over time, its cost has also seen dramatic gains. KFF research indicates that in 2022 alone, employee-sponsored single coverage costs increased 14% and family coverage rose 20% when compared with 2021 due to rising premium costs for employee plans.
Even though employer-sponsored health care coverage has seen an increase, many working-age adults don’t have adequate or affordable access to it through their jobs – especially people working for smaller firms or being self-employed.
Employers have begun adapting their health insurance offerings in order to make healthcare more affordable for employees. Employers have implemented cost sharing arrangements such as high-deductible health plans with savings options in order to help employees better afford health care deductibles. Such plans often feature lower monthly premiums than traditional plans while providing enrollees the chance to deposit pretax dollars directly into a savings account to cover them.
Due to these trends, the number of individuals covered by health insurance through employers has remained flat since 2021; however, those covered through other sources (community/nonprofit organizations/government and individual marketplaces) has significantly increased since this same time frame.
What Does It Mean for You?
Large and midsize private employers tend to provide health benefits for their employees, while it’s less common among smaller businesses.
As part of your employee compensation package, whether or not to include insurance will depend on both your goals for your business and financial realities. On average, employers cover approximately 83% of single coverage costs; 73% cover family coverage costs.
KFF research suggests that companies with three to 199 employees tend to cover 100% of individual premiums of employees; about 30% do so while this drops to about 5% for larger firms.
What Does It Mean for Your Employees?
Many employees allocate the majority of their monthly paycheck towards paying their health insurance premium, making it imperative that companies cover some portion of these costs so their employees have quality coverage at an affordable cost. Companies typically cover some portion of an employee’s premium costs for individual coverage; others pay for family plans entirely. Large firms traditionally covered all of their employee premium costs for individual coverage. Since the Affordable Care Act’s individual mandate was implemented, these numbers began to shift dramatically. Starting in 2021, employers must provide plans that provide affordable coverage while meeting minimum value to full-time workers who work 30 or more hours each week or face penalties.
On average, employer contributions toward individual health insurance coverage run between 82% and 89% of total plan costs; for family plans this proportion typically ranges between 67%-75% of costs. Last year alone, average employer contributions for single coverage averaged $7911 while 22463 covered family coverage plans received contributions.
Other than these changes, employers’ contribution rates in their group health insurance plans remained unaltered between 2020-2021, as did offer rates at small firms, medium firms, and large firms.
As the health insurance market evolves, companies are seeking ways to lower costs while helping employees afford better plans. One such method is offering flexible spending accounts (FSAs) which enable employees to use funds from the company towards purchasing health coverage themselves – often through payroll deduction. FSAs allow employees to save money by purchasing health plans through FSAs at reduced costs than otherwise possible.
Small organizations don’t always have the purchasing power of larger firms to cover all individual employee premiums, which is why many are opting for alternatives such as health reimbursement accounts (HRAs). HRAs enable smaller organizations to give employees an allowance towards individual healthcare costs allowing them to tailor benefits packages that are more cost effective for all.
What Does It Mean for Your Bottom Line?
No matter the amount you contribute to your employees’ health insurance plans, it’s essential that you have an accurate picture of costs. Employers typically cover between 82-88% and 73% of costs associated with single and family plans respectively based on plan type. Small businesses tend to cover higher percentages of individual premiums than larger firms due to having fewer employees needing coverage.
