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Small Business Employee Benefits and HR Blog

Small Group vs. Large Group Health Insurance - How Rates and Coverage Stack Up

August 23, 2013
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The United States is home to over seven million employers, of which 98% of are small employers with less than 200 workers. As reported in a recent study by the Kaiser Family Foundation, health insurance rates and offerings vary significantly between small and large employers. This article provides an overview of trends in small group and large group health insurance. Do you agree with these health insurance trends? Any surprises?small group vs large group insurnce

Small Employers Less Likely to Offer Health Insurance

Small employers are much less likely to offer health insurance to their employees than large employers – 98% of large employers (200+ employees) offer coverage to at least some of their employees. This is a big difference to small employers (less than 200 employees), of which only 61% offer coverage to at least some of their employees. 

The study found that ~60% of employees who were offered coverage enrolled, whether it was from a large or small employer.  However, because less small employers offer health benefits in the first place, the actual percentage of small firm employees covered by health benefits is 47%. The percentage of large firm employees covered by health benefits is 62%, since virtually every large firm offers health benefits.

Why don't small employers offer health insurance? In 2012, 48% of small employers not offering coverage cited that the cost of health insurance was the primary reason for not offering health benefits.

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Source: KFF Snapshots.

Premium Cost-Sharing - Small Groups vs. Large Groups

For individuals covered by employer-sponsored group policies, the small group and large group premiums are not statistically different from each other. However, the premiums for family policies are lower for small employers than large employers ($15,253 and $15,980, respectively). 

Although family premiums may be lower for small groups, the amount that employees contribute to a family plan is, on average, 31% more in a small group than in a large group ($5,134 vs. $3,926, respectively). On average, employees with family plans in small groups pay 35% of their premium, while employees with family plans in large groups pay 25% of the premium.

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When it comes to single coverage premium contributions, a small employer is more likely to provide full coverage and require no contribution from their employee than a large employer. The study found that 36% of small employers required no employee contribution for single coverage, where only 6% of large employers fully covered the premium.

However, employees at small employers were more likely to pay more than 50% of the premium for family coverage. The study found that 30% of small employers required employees to contribute more than 50% of the premium for family coverage, compared to 6% of large employers.

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Source: KFF Snapshots.

What do you think of these small group and large group health insurance trends? Any surprises? Let us know in the comments below. 

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