Less than half of small businesses in the United States offer benefits to their employees, the lowest level in two decades, according to new LIMRA research.
Small businesses are classified as those with between two and 99 employees.
LIMRA's study found that 78 percent of small businesses in the U.S. are family-owned, which experienced a sharper decline in benefit penetration between 2005 and 2012 than non-family-owned companies. Only 40 percent of these businesses offered insurance benefits in 2012, compared to 47 percent in 2005.
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"The recession has had an impact on smaller employers' ability to offer benefits, particularly those with fewer than 10 employees," said Kim Landry, research analyst with LIMRA Product Research. "The weak economy caused a lot of small firms to close, while the new firms cropping up to replace them are less likely to offer benefits. Many small businesses are also hesitant to add new benefits until the economy improves."
The study also found that one-quarter of small businesses are female-owned, which tend to be smaller, produce lower revenues than male-owned companies, and are less likely to offer insurance benefits (37 percent vs. 50 percent of male-owned small businesses).
Among those small businesses that do offer insurance benefits to their employees, medical and prescription drug plans are by far the most popular and tend to be the first benefits that companies bring on board.
"These benefits provide an opportunity for small business owners to obtain coverage not only for their employees, but also for themselves and their families," Landry said. "We also found dental and vision coverage to be common offerings among small businesses, as these products tend to be very popular with employees."
Life insurance is frequently offered by small firms, whose preference for this benefit is most likely associated with its low cost and ease of administration. Products like long-term disability, short-term disability and accident insurance have fairly low penetration rates among small businesses.
In February and March 2012, LIMRA conducted a telephone survey of 754 private small businesses in the U.S.
LIMRA is a worldwide research, consulting and professional development organization.
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