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As workers across the country enroll in their 2025 health insurance plans, a new report from the Commonwealth Fund reveals that small-business employees face higher health insurance deductibles and premium costs compared to their counterparts at larger companies. And despite paying more, these workers receive coverage with less financial protection.
The report, “Trends in Employer Health Insurance Costs, 2014–2023: Coverage Is More Expensive for Workers in Small Businesses,” examines national trends and differences in the affordability and quality of employer-sponsored coverage for workers in small and large firms across all 50 states and the District of Columbia.
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Small firms are defined as businesses with fewer than 50 employees, while large firms employ 50 or more. Smaller employers often face unique challenges, including higher administrative costs and reduced bargaining power with insurers. They are not required by law to offer health insurance.
“This report underscores how not all employer health plans are created equal,” Sara R. Collins, coauthor of the study and a Commonwealth Fund Senior Scholar and vice president, said in a statement. “Workers at small businesses often shoulder higher premiums for plans that have higher deductibles than those at larger companies. But these affordability issues all have workable policy solutions — whether it’s creating a federal fallback for Medicaid-eligible workers in states that have not expanded the program or making it easier for small- business employees to qualify for subsidized marketplace coverage.”
Key findings
Here are three main highlights from the report:
1. In 2023, small-business employees paid an average of $7,529 annually for their share of family premiums — $733 more than employees at larger firms. The average family plan deductible in 2023 was $5,074, which is more than $1,500 higher than the $3,547 average for large-firm employees.
2. Health insurance costs for workers vary across states by employer size, with family health plan premiums for employees at small firms in some states nearly double those at large firms. In Massachusetts, for example, small-firm employees paid an average of $12,604 annually for family premiums in 2023, compared to $6,933 for workers at larger companies. In 40 states and the District of Columbia, small-firm employees also contributed a larger share of the premium for family coverage than their large-firm counterparts. In Arkansas, small-firm workers contributed about 56% of their premiums, compared to around 27% for large-firm workers.
3. Small-firm employees are paying more in up-front premium contributions, yet their plans continue to have high deductibles. Every year since 2017, employees in small companies have spent more for their contributions toward premiums for family coverage than employees in large companies — reflecting growing cost and small firms’ need to share more of that cost with their workers. Premium contributions for small-firm workers rose from an average of $5,413 in 2017 to $7,529 in 2023, compared to $5,190 for large-firm workers in 2017 and $6,796 in 2023.
“One thing is clear: Employees at both small and large companies are seeing their premiums and deductibles continue to climb, and hard-working families are paying the price,” said Commonwealth Fund President Joseph R. Betancourt, M.D. “Many patients are simply forgoing needed care because they can’t afford more medical bills. This report highlights the urgent need for real policy action to address the root cause of this crisis: America’s unsustainable and spiraling health care costs.”
Such action, the report emphasizes, could include expanding Medicaid access, allowing for greater access to marketplace subsidies, and permanently extending enhanced marketplace premium tax credits. States also could introduce measures to limit growth in premiums and cost sharing in fully insured employer plans, according to the report.
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