Small business workers face higher costs for family insurance coverage

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A report by the Kaiser Family Foundation showed that workers in companies with between three and 199 workers on average have to pay higher contributions to enroll in family coverage and are more likely to face very high contribution amounts.

The average contribution for a family of four in 2021 was $7,710 for small business workers, compared to $5,269 for large business workers. Twenty-nine percent of covered workers at small businesses faced a contribution of at least $10,000 for family coverage, compared to only 5% of covered workers at large businesses.

According to the researchers, one of the reasons why family contributions may be higher in small businesses is that some small employers only contribute to the cost of self-insurance, leaving the worker to pay the difference between the premium for self-insurance and premium for family insurance. . Even in companies that choose less comprehensive coverage, this difference can amount to several thousand dollars.
The report indicates that about 19% of small businesses offering health benefits contribute little or nothing to the cost of family coverage. These companies employ approximately 17% of covered workers registered in small companies.

Workers in the service sector are more likely to face high premiums for family coverage compared to those in other sectors, such as wholesale trade, transportation, communications, utilities and government.
The Biden administration recently released a proposed rule to make it easier for family members of workers with workplace health insurance to qualify for premium tax credits for Marketplace coverage. Under the ACA, a person who enrolls in a Marketplace plan is not eligible for a premium tax credit if they are eligible for employment-based coverage that is considered affordable and offers a minimum value (ie covers at least 60% of health expenditure on average) . Current regulations provide that employment-based coverage is considered affordable for a worker and their dependents if the worker’s cost of self-coverage is less than 9.6% of family income, regardless of account for the cost of adding family members. The proposal would revise this interpretation by assessing the affordability of employment-based coverage available to family members of a worker by comparing the total cost for the entire family (including the worker) to the threshold of 9.6 %. This assessment would measure affordability for family members other than the worker. Affordability for the worker themselves would continue to be based on the cost of coverage for themselves alone.

The report indicates that approximately 5.1 million people are currently affected by these cost disparities, and that 12% face a contribution of at least $10,000 for the insurance of a family of four. Workers in small businesses would benefit the most from the new rule, the researchers said.

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