Small Businesses Drop Healthcare Coverage with Cost, ACA Given as Reasons

Small Business Healthcare Coverage Trends Show Drop, ACA Given as Reasons

Fewer small businesses are offering healthcare coverage to their employees than have in recent years, according to recent research.

Small Business Healthcare Coverage Trends

The Kaiser Family Foundation found that only 50 percent of small businesses with between three and 49 employees offer healthcare coverage to employees. That’s down from 59 percent that offered coverage in 2012 and 66 percent more than 10 years ago.

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There are many potential reasons for this growing trend. But the biggest seems to be the cost involved. In the survey, 44 percent of businesses that don’t offer health benefits cited cost as the main reason why. Price hikes have become commonplace in recent years, especially since the passage of the Affordable Care Act. And those prices have simply climbed too fast for many small businesses to adapt.

Of course, businesses with less than 50 employees are not required by the ACA to provide health benefits to employees. But doing so can be a major draw or even a requirement for businesses looking to attract and retain great workers.

However, some small businesses are making up the difference by simply offering more monetary compensation to employees so they can go to the marketplace and pay for their own health coverage with the extra money. Others have found that their employees simply obtain health coverage through a spouse or, in the case of young workers under the age of 26, from their parents. This last option of staying on a parent’s plan is again due to changes ushered in with Obamacare.

Overall, this trend is a disturbing one for small businesses. Health benefits are often considered to be an important factor for job hunters. And since large companies with full time workers largely provide those benefits, the inability for some small businesses to do so can make them less competitive. Some small businesses are looking to make up for that in other ways. And doing so might become more and more important for small businesses struggling to navigate the complicated world of employer health coverage.

Obamacare Photo via Shutterstock

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Annie Pilon Annie Pilon is a Senior Staff Writer for Small Business Trends, covering entrepreneur profiles, interviews, feature stories, community news and in-depth, expert-based guides. When she’s not writing she can be found exploring all that her home state of Michigan has to offer.

One Reaction
  1. Of course this percentage is dropping. The cost of an ACA small business policy is absurdly high. Ours is $25,000 for a married couple. As a small business, it’s up to each employee to decide whether they are okay being “uninsured”. There are alternative to the grossly overprices ACA policies, but each person needs to handle that individually.

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