High premiums make family coverage unaffordable for many workers at small employers
Workers employed by small firms -- those with fewer than 200 employees -- would need to pay an average of $8,334 toward the premiums each year for family coverage.
Finding affordable health coverage is a struggle for employees who work for small companies.
“For many of the almost 50 million people working for the 3.2 million smaller companies in America, family coverage is no longer affordable,” said Drew Altman, Ph.D., CEO of KFF. “It is likely to be prohibitive for the really small companies — the pizza shop, the dry cleaners or the bakery. On average, workers at these firms have fewer resources to cover health costs. Salaries at firms of less than 200 employees are $44,600 on average, compared to $63,200 for workers at larger firms.”
The 2023 KFF Employer Health Benefit Survey took a close look at the numbers. Workers employed by small firms — those with fewer than 200 employees — would need to pay an average of $8,334 toward the premiums each year for family coverage. Although employers pay the difference on premiums that average $23,621 for family coverage, enrolling a family at these firms often can cost much more. A quarter of covered workers at small firms must pay $12,000 or more annually to enroll in family coverage.
Moreover, this doesn’t include what workers pay for deductibles or other out-of-pocket costs, which also typically are higher at small companies. High deductibles are common for families covered by small firms. Nearly 6 in 10 have to pay $3,000 or more before at least one member of the family meets the deductible and the plan starts covering most services. For more than a third of covered workers at small firms, the deductible is at least $5,000, and it may be more if multiple family members have to spend against the deductible in a year.
As costs rise, however, workers at smaller firms may not have a lot of other options.
“The Biden Administration’s fix of the Affordable Care Act’s family glitch provides a more affordable option for some family members of workers at small businesses, but many have no choice but to pay a lot for employer family coverage or go uninsured,” Altman said.
Eligibility and offer rates among small firms have remained steady, meaning a similar share of workers can enroll in benefits, but that does not always mean the offer fits into a family’s budget. Employer coverage can be quite robust for lots of workers, but benefits and costs are not consistent across employers.
Related: 2023 average health care cost projections for employer-based plans
“There have been a variety of proposals made to open up marketplace coverage for more workers in small firms and to subsidize their coverage,” Altman said. “The issue is complex and full of tradeoffs but well worth further policy development”.