Many small employers (between two
and 50 workers) are making decisions about whether to
offer health benefits to their workers without being
fully aware of the tax advantages that can make this
benefit more affordable. Fifty-seven percent of small
employers did not know that they can deduct 100 percent
of their health insurance premiums.
Nearly one-half of small employers
are not aware that workers who purchase health insurance
on their own generally cannot deduct 100 percent of their
health insurance premiums.
Small employers are largely unaware
of the laws that have been enacted by nearly all states
and the federal government with the intent of making
health insurance more accessible and more affordable for
many small employers. More than 60 percent did not know
that insurers may not deny health insurance coverage to
small employers even when the health status of their
workers is poor.
Most employers offer sound business
reasons for offering health benefits to workers. Many
have found that it helps with employee recruitment and
retention, increases productivity, and reduces
absenteeism.
Nearly 50 percent of the employers
offering dependent (family) coverage report that the
workers do not take coverage for their dependents because
the dependents have coverage from somewhere else.
Twenty-seven percent report their employees decline
dependent coverage because they cannot afford the
premiums.
Many small employers that do not
offer health benefits are potential purchasers. Twelve
percent are either extremely or very likely to start
offering health benefits in the next two years, and 17
percent are somewhat likely to start offering health
benefits.
A number of factors would increase
the likelihood that a small business would seriously
consider offering a health benefits plan. Two-thirds of
small-business owners said they would seriously consider
offering health benefits if the government provided
assistance with premiums. Almost one-half would consider
doing so if insurance costs fell 10 percent. In addition,
one-half would be more likely to seriously consider
offering a health benefits plan if employees demand it.
Many small employers with health
benefits have recently switched health plans, and 34
percent report that they did so within the past year.
Affordability for the employer and
the worker is clearly a critical factor affecting the
likelihood of switching health plans. Nearly all
employers who have switched health plans within the past
five years cite cost as the main reason. One-third of
companies offering health benefits think they will change
coverage, and 5 percent think they would drop coverage if
the cost of health insurance were to increase by 5
percent.
