Employer-Sponsored Coverage

 

Employer-sponsored health coverage is the most common type of health insurance. About 149 million nonelderly Americans receive their health benefits through an employer.

 

Large Group 

The large group market is employer-sponsored health insurance that typically covers more than 50 employees, although the number may vary depending on state law. Many large employers choose to “self-fund,” so that they bear the ultimate risk for claims costs. These self-funded arrangements may be administered by a third-party administrator (TPA) or a health insurance plan. Other large groups provide coverage to their employees through “fully insured” coverage from an insurance carrier. Employees have a strong incentive to sign up for employer coverage, regardless of their health or financial status. When nearly everybody in a firm signs up, premiums reflect the average cost of coverage for a cross-section of people.

Small Group 

The small group market is employer-sponsored health insurance that typically covers 2-50 individuals within a firm. Small businesses commonly rely on this market to provide a competitive benefits package to their employees. Coverage in the small group market is offered on a guarantee-issue basis.

The Impact of the Affordable Care Act 

Changes to health insurance coverage under the health reform law will have the greatest impact on the individual and small group markets. Many large employers already provide many of the benefits required by the law and those that “self-fund” their health insurance are not subject to many of the new rules and taxes.

Generally speaking, small businesses offer health insurance benefits that are less comprehensive than those provided by large employers. Under the reform law, the minimum level of benefits that must be offered as well as changes in how premiums are set will affect small businesses to a much greater degree than large businesses. Many small employers will need to “buy up” to purchase benefits packages that meet the new minimum coverage requirements.

In addition, the new health insurance tax will increase costs for fully insured plans—the plans that 88 percent of small business owners currently purchase. According to an analysis by the actuarial firm Oliver Wyman, this tax will mean that next year an individual purchasing coverage on his or her own will pay $110 in higher premiums and small businesses will pay an additional $360 for each family they cover.

Latest Resources

Annual Employer Health Benefits Survey

The Kaiser Family Foundation conducts this annual survey of employers and provides a detailed look at trends in employer-sponsored health coverage, including premiums, employee contributions, cost-sharing provisions, and other relevant information.

Reports/Research/White Papers | Strategic Communications | 06/05/2012

Small Group Health Insurance in 2010: A Comprehensive Survey of Premiums, Product Choices, and Benefits - [PDF]

In July 2010, America’s Health Insurance Plans (AHIP) conducted a comprehensive survey of member companies offering coverage in the small group health insurance market. Responses included premium and benefit data from more than 477,000 small groups (those with 50 or fewer employees), reflecting approximately 3.7 million workers and 1.3 million dependents with coverage as of January 2010.

Reports/Research/White Papers | Center for Policy and Research, Product Policy | 07/08/2011

Annual Employer Health Benefits Survey

The Kaiser Family Foundation conducts this annual survey of employers and provides a detailed look at trends in employer-sponsored health coverage, including premiums, employee contributions, cost-sharing provisions, and other relevant information.

Reports/Research/White Papers | 09/02/2010