2021 Employer Health Benefits Survey
Section 2: Health Benefits Offer Rates
While nearly all large firms (200 or more workers) offer health benefits to at least some workers, small firms (3-199 workers) are significantly less likely to do so. The percentage of all firms offering health benefits in 2021 (59%) is similar to the percentages of firms offering health benefits last year (56%) and five years ago (56%).
Firms not offering health benefits continue to cite cost as the most important reason they do not do so. Almost all (96%) firms that offer coverage offer both single and family coverage.
FIRM OFFER RATES
- In 2021, 59% of firms offer health benefits, similar to the percentage last year [Figure 2.1].
- The overall percentage of firms offering health benefits in 2021 is similar to the percentages offering health benefits in 2016 (56%) and 2011 (60%) [Figure 2.1].
- Ninety-nine percent of large firms offer health benefits to at least some of their workers. In contrast, only 58% of small firms offer health benefits [Figures 2.2 and 2.3]. The percentages of both small and large firms offering health benefits to at least some of their workers in 2021 are similar to those last year [Figure 2.2].
- The smallest-sized firms are least likely to offer health insurance: 49% of firms with 3-9 workers offer coverage, compared to 65% of firms with 10-24 workers, 74% of firms with 25-49 workers, and 93% of firms with 50-199 workers [Figure 2.3]. Since most firms in the country are small, variation in the overall offer rate is driven largely by changes in the percentages of the smallest firms (3-9 workers) offering health benefits [Figure 2.4]. For more information on the distribution of firms in the country, see the Survey Design and Methods Section and [Figure M.6].
- Only 56% of firms with 3-49 workers offer health benefits to at least some of their workers, compared to 94% of firms with 50 or more workers [Figure 2.5].
- Because most workers are employed by larger firms, most workers work at a firm that offers health benefits to at least some of its employees. Ninety-one percent of all workers are employed by a firm that offers health benefits to at least some of its workers [Figure 2.6].
- Among firms offering health benefits, relatively few offer benefits to their part-time workers.
- The Affordable Care Act (ACA) defines full-time workers as those who on average work at least 30 hours per week, and part-time workers as those who on average work fewer than 30 hours per week. The employer shared responsibility provision of the ACA requires that firms with at least 50 full-time equivalent employees offer most full-time employees coverage that meets minimum standards or be assessed a penalty.10
Beginning in 2015, we modified the survey to explicitly ask employers whether they offered benefits to employees working fewer than 30 hours. Our previous question did not include a definition of “part-time”. For this reason, historical data on part-time offer rates are shown, but we did not test whether the differences between 2014 and 2015 were significant. Many employers may work with multiple definitions of part-time; one for their compliance with legal requirements and another for internal policies and programs.
ASSISTING EMPLOYEES TO PURCHASE COVERAGE IN NON-GROUP MARKET
Some employers provide funds to some or all of their employees to help them purchase coverage in the individual (“non-group”) market. Employers that do not otherwise offer health benefits may do this an alternative to offering a group plan, or employers that offer a group plan to some employees may use this approach for some types or classes of workers, such as part-time employees. One way an employer can provide tax-preferred assistance for employees to purchase non-group coverage is through an Individual Coverage Health Reimbursement Arrangement, or ICHRA. Both employers that offer and those that do not offer health benefits were asked if they provide funds to any employee to purchase non-group coverage.
- Four percent of firms offering health benefits and 7% of firms not offering health benefits offer funds to one or more of their employees to purchase non-group coverage in 2021 [Figure 2.10].
- Among small firms not offering health benefits, 7% offer funds to one or more of their employees to purchase non-group coverage, similar to the percentage (8%) last year [Figure 2.11].
- Among all firms (offering and not offering health benefits) that do not offer funds to any employees to purchase non-group coverage in 2021, only 1% are “very likely” and an additional 7% are “somewhat likely” to offer an ICHRA to at least some employees in the next two years.
- Large firms that currently offer or intend to offer an ICHRA were asked about the types of employees that are or would be offered such an arrangement. Forty-four percent offer or intend to offer an ICHRA to all their employees, 16% offer or intend to offer to part-time or seasonal workers, 60% offer or intend to offer to low-wage workers, and 19% offer or intend to offer to some other group of employees, such as only full-time employees.
FIRMS NOT OFFERING HEALTH BENEFITS
- The survey asks firms that do not offer health benefits several questions, including whether they have offered insurance or shopped for insurance in the recent past, their most important reasons for not offering coverage, and their opinion on whether their employees would prefer an increase in wages or health insurance if additional funds were available to increase their compensation. Because such a small percentage of large firms report not offering health benefits, we present responses for small non-offering firms only.
- The cost of health insurance remains the primary reason cited by firms for not offering health benefits. Among small firms not offering health benefits, 30% cite high cost as “the most important reason” for not doing so. Other factors include employees are covered by another health plan (including a spouse’s plan) (21%), “the firm is too small” (25%), and “most employees are part-time or temporary workers” (7%). Few small firms indicate that they do not offer because they believe employees will get a better deal on the health insurance exchanges (1%) [Figure 2.14].
- Some small non-offering firms have either offered health insurance in the past five years or shopped for health insurance in the past year.
- Twelve percent of small non-offering firms have offered health benefits in the past five years, similar to than the percentage reported last year [Figure 2.15].
- Ten percent of small non-offering firms have shopped for coverage in the past year, similar to the percentage last year (17%) [Figure 2.15].
- Among small non-offering firms that report they stopped offering coverage within the past five years, 16% stopped offering coverage within the past year.
- Seventy-four percent of small firms not offering health benefits believed that their employees would prefer a two dollar per hour increase in wages rather than health insurance. [Figure 2.16].
- Internal Revenue Code. 26 U.S. Code § 4980H – Shared responsibility for employers regarding health coverage. 2011. https://www.gpo.gov/fdsys/pkg/USCODE-2011-title26/pdf/USCODE-2011-title26-subtitleD-chap43-sec4980H.pdf↩︎