Employers are the principal source of health insurance in the United States, providing health benefits for about 158 million nonelderly people in America.¹ In firms that both offer and do not offer health benefits, 59% of workers are covered by health benefits offered by their firm. Most workers are offered health coverage at work, and the vast majority of workers who are offered coverage take it. Workers may not be covered by their own employer for several reasons: their employer may not offer coverage, they may be ineligible for benefits offered by their firm, they may choose to elect coverage through their spouse’s employer, or they may refuse an offer of coverage from their firm.

• Fifty-nine percent of workers in firms both offering and not offering health benefits are covered by health benefits offered by their own employer (Exhibit 3.1). Looking only at workers in firms that offer health benefits, 65% percent are covered by health benefits offered by their own employer (Exhibit 3.2). The rate of coverage varies by certain characteristics of the firm, such as firm size, industry, and the percentage of part-time and low-wage employees.
• • There is significant variation in the coverage rate across industry groups. Forty-four percent of workers in retail firms are covered by health benefits offered by their firm, compared to 80% of workers in state and local government, and 79% of workers in the manufacturing industry (Exhibit 3.2).
    
    
  • Among workers in firms offering health benefits, those in firms with relatively few part-time workers (where fewer than 35% of workers are part-time) are much more likely to be covered by their own firm than workers in firms with a greater percentage of part-time workers. Seventy-two percent of workers in firms with relatively few part-time workers are covered by their own employer, compared to 38% in firms with higher percentages of part-time workers (Exhibit 3.5).
    
    
  • Also, among workers in firms offering health benefits, those in firms with fewer lower-wage workers (where fewer than 35% of workers earn $21,000 or less annually) are more likely to be covered by their own firm than workers in firms with many lower-wage workers (where 35% or more of workers earn $21,000 or less annually). Sixty-nine percent of workers in higher wage firms are covered by their own employer, compared to 46% of workers in lower wage firms (Exhibit 3.5).
    
    
• Even in firms that offer coverage, not all employees are eligible for the health benefits offered by their firm. Additionally, not all eligible employees who are offered health coverage take the offer of coverage. The number of workers covered is a product of both the percentage of workers who are actually eligible for the firm’s health insurance and the percentage who choose to “take up” (i.e., elect to participate in) the benefit.
• • Seventy-nine percent of workers in firms offering health benefits are eligible for the coverage offered by their employer in 2007, similar to the percentage (78%) reported last year (Exhibit 3.6). The average rates of eligibility are significantly higher in firms with 3 to 24 workers (83%), firms with 25 to 49 workers (84%), and firms with 1,000 to 4,999 workers (82%) than the eligibility rates in firms of other sizes (Exhibit 3.2).
    
    
  • Employees who are offered coverage through their employer generally elect to take the offer. Eighty-two percent of eligible workers take up coverage when it is offered to them, the same percentage as last year (Exhibit 3.6).
    
    
  • The likelihood of a worker accepting a firm’s offer of coverage varies by firm wage level. Eligible employees in firms with a lower proportion of lower-wage workers (firms where fewer than 35% of workers earn $21,000 or less annually) are more likely to take up coverage (85%) than eligible employees in firms with a higher proportion of lower-wage workers (where 35% or more of workers earn $21,000 or less annually) (70%) (Exhibit 3.4).
    
    
• Seventy-five percent of covered workers face a waiting period before coverage is available. Covered workers in the Northeast are less likely (64%) and covered workers in the West are more likely (85%) than workers in other regions to face a waiting period before coverage becomes effective. Covered workers in retail firms are much more likely (94%) than workers in other industries to face a waiting period. The average waiting period among covered workers who face a waiting period is 2.2 months (Exhibit 3.7).
  
  

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