Health insurance costs are growing and companies aren’t able to keep up. There’s also legislation and certain government requirements that make providing benefits very difficult for small business owners. As a direct result, a new study shows that far fewer companies now offer health insurance to their employees.
According to a report from the University of Minnesota, the percentage of employers who offered health insurance in 2015 was just 45.7 percent – a decrease of 1.8 percent from 2014.
Large Businesses Are Doing Okay
Large insurance companies seem to be okay with shifts in government policies and rising insurance rates. The number of companies that offered insurance to their employees grew by 1.2 percentage points, reaching 96 percent in 2015. The low percentage mentioned above is brought down by smaller organizations that can’t keep up with the demand.
“The findings may be partially explained by large employers adding coverage benefits to meet the rules of the Affordable Care Act, while small employers may have shed some employees or reduced hours to remain under the threshold where offering health insurance benefits is required,” the researchers said in a news release.
Small Businesses Hurt the Most
The problem is most prominent in the small business setting. Small businesses, or those with less than 50 employees, that offer health insurance dropped to just below 30 percent in 2015. This is down almost three percent from 2014, and down six percent from 2011 when the national average was 35.7 percent.
There are many reasons for this issue, but the largest is an inability for small employees to meet the rules regulated by the Affordable Care Act. The costs of maintaining health insurance benefits are more than they can handle.
To avoid being penalized for not offering benefits, organizations don’t hire full-time employees. As long as your employees work less than 30 hours per week, you’re not required to offer health insurance, and doing so is the only way that some small businesses feel they can stay afloat.
Employees Choosing Not to Enroll
What’s more, data from the Medical Expenditure Panel Survey-Insurance Component, produced by the Agency for Healthcare Research and Quality, showed that employees also seem to be less interested in enrolling. According to the study, about 83.8 percent of all full-time employees in the United States are given the opportunity of company-subsidized insurance. However, only 75 percent of those employees choose to enroll.
These stats vary by state. In Hawaii, for example, 97.7 percent of employees who are offered insurance take it, making it the highest acceptance rate in the nation. Montana had the lowest employee acceptance rate with only 66 percent choosing to enroll when offered insurance.
Insurance rates have continued to rise over the years, and employees aren’t sure they can live comfortably while also covering their insurance. If they don’t enroll in employer-sponsored insurance, they often choose to go without.
“Even with overall coverage expansions under health reform, most people still get insurance through work,” said Lynn Blewett, director of SHADAC, in a statement. “As more autonomy is given to states to design insurance markets of their own, it will be important to ensure a consistent level of benefits are offered nationwide, or the variation between states will increase.”
Employer-Sponsored Insurance Is the Best Deal
Based on previous legislation from the Affordable Care Act, individuals and families without approved health insurance are subject to a fee at the end of the year. Many people choose to pay the fee rather than shelling out the $17k average yearly premium for family coverage.
Others choose to shop for a better healthcare plan. In some cases, it can be cheaper to purchase a healthcare package outside of your company. This depends on your state of residence, your income, applicable government subsidies, and your dependents.
However, in most cases, it’s significantly cheaper to purchase health insurance through an employer-subsidized premium. On average, employers who offer insurance plans pay for 30 percent of the yearly premium, which saves you thousands of dollars.
Decreases in Insurance Offerings Raise Political Concern
Because it’s cheaper, this form of healthcare is a staple in our society .”Employer-sponsored coverage is the main source of health care coverage for Americans,” Kathy Hempstead, a senior advisor at UMN, told Star Tribune.
She goes on to explain that this percentage drop is a little worrisome, but it’s not much different than the typical average. “Trends in this market segment continue to be stable overall, despite some decline in offer rates among smaller firms,” she says.
Overall, these studies advise us to watch the future of the health insurance market. The number of families going without health insurance due to rising premiums is of some concern, and Congress is working on a solution to the growing problem.