Small Employers are Dropping Health Care Benefits

July 29, 2016

A new report from the Employee Benefits Research Institute shows that while large employers continue to offer health care benefits, fewer and fewer small employers are doing so.  Specifically, the EBRI report shows that from 2008 to 2015, over 99 percent of employers with 1,000 or more employees offered health care benefits, while the percentage of employers with less than 10 employees offering coverage fell by 36 percent, and the percentage of employers with 10 to 24 employees offering coverage fell by 26 percent.  Although the report suggests several plausible reasons for the decline, including rising health care costs, the ACA, and the previous recession, it notes that the cost of providing health care benefits is increasingly outweighing the talent recruitment and retention benefits for small employers.  The report also notes that "certain public policy changes, if adopted, may drive some employers—larger and smaller employers alike—away from offering health benefits and cause some workers to care less about whether they get health coverage from their employer.  For example, several tax and health reform proposals would modify the tax exclusion of employment-based health coverage for workers by applying a cap" and provide all taxpayers, not just workers, with a tax credit to purchase coverage in the individual market.