With major provisions of health reform in full effect, experts agree the landscape of employer health insurance is rapidly changing. This article outlines five small business health benefit trends to know for 2015, and why these trends matter to small businesses.
Trend #1: The Majority of Americans Still Get Insurance Through Work (For Now)
Currently, the majority (56%) of non-elderly Americans get their health insurance through work. Of the nearly 267 million non-elderly residents in the U.S., 56% are covered through their employer, 18% are uninsured, 21% are covered through Medicaid or another public program, and 6% are covered through an individual or family plan.
Why this matters: The percentage of Americans who get health insurance through work has been steadily declining over the past decade. In fact, S&P Capital predicts that 90% of companies will abandon employer-sponsored health insurance by 2020 in favor of individual health insurance and the government Marketplaces.
Trend #2: 3.3 Million Small & Medium Sized Employers Do Not Offer Health Insurance
Over 3.3 million small and medium sized businesses in the U.S. do offer health insurance to employees, mainly because of cost.
Why this matters: If you haven't been able to afford traditional group health insurance, or do not believe it is the best way to insure employees, you are not alone. This trend is also evidence that small businesses need more affordable and sustainable health insurance solutions.
Trend #3: The Cost of Group Health Insurance Continues to Rise
In 2014, the average cost to cover an individual through an employer-sponsored group health plan was $6,025/year ($502/month); compared to $4,152/year ($346/month) with a nonsubsidized individual health plan. When the premium tax credits are applied, subsidized individual health insurance averaged $984/year ($82/month) – 84% less than group health insurance.
Why this matters: The cost of group health insurance is unaffordable and unsustainable for small businesses and employees. Individual health insurance costs less and provides equal (or better) coverage than comparable group health coverage.
Trend #4: Small Businesses Continue to Drop Group Coverage
Small and micro businesses have been particularly impacted by the cost increases of group health insurance. The number of micro employers (3-9 employees) that offer health insurance dropped from 59% in 2010 to just 44% in 2014.
Why this matters: Small businesses continue to struggle with the cost and eligibility requirements of group health insurance. For most small businesses, group health insurance coverage is no longer the best health benefit solution. Which begs the question, Why are Small Businesses Still Offering Group Health Insurance?
Trend #5: Small Businesses Adopting Employer-Funded Individual Health Insurance
Because of the unsustainable cost of employer-sponsored group health insurance, combined with new advantages of individual health insurance, it’s estimated that 60% of small businesses will eliminate employer-sponsored health insurance by 2017 in favor of employer-funded individual health insurance.
Why this matters: We are in the middle of a significant transformation in how employers, and employees, purchase health insurance. Small businesses are leading the way by rapidly transitioning to individual health insurance and premium reimbursement programs.