2014 Employer Health Benefits Survey
Section Two: Health Benefits Offer Rates
While nearly all large firms (200 or more workers) offer health benefits to at least some employees, small firms (3-199 workers) are significantly less likely to do so. The percentage of all firms offering health benefits in 2014 (55%) is not statistically different from 2013 and 2012 (57% and 61%, respectively). Over a third of firms offering health benefits cover (39%) same-sex domestic partners; the same percentage which covers opposite-sex domestic partners. Nine percent of firms which offer family coverage restrict eligibility to a spouse when he/she has another offer of coverage. Among large employers offering health benefits 88% offer or contribute to separate dental benefits and 63% do so for separate vision benefits. Firms not offering health benefits continue to cite “cost” as the most important reason they do not offer health benefits (32%).
- Offer rates vary across different types of firms.
- Smaller firms are less likely to offer health insurance: 44% of firms with 3 to 9 workers offer coverage, compared to 64% of firms with 10 to 24 workers, 83% of firms with 25 to 49 workers, and 91% of firms with 50 to 199 employees (Exhibit 2.3).
- Offer rates throughout different firm size categories in 2014 remained similar to those reported in 2013 (Exhibit 2.2).
- Firms with fewer lower-wage workers (less than 35% of workers earn $23,000 or less annually) are significantly more likely to offer health insurance than firms with many lower-wage workers (55% vs. 33%) (Exhibit 2.4). The offer rate for firms with many lower-wage workers is not significantly different from the 23% reported in 2013.
- We observe a similar pattern among firms with many higher-wage workers (35% or more of workers earn $57,000 or more annually) being more likely to offer coverage to employees (69% versus 47%) (Exhibit 2.4).
- The age of the workforce correlates with the probability of a firm offering health benefits. Firms where 35% or more of its workers are age 26 or younger are less likely to offer health benefits than firms where less than 35% of workers are age 26 or younger (30% and 53%, respectively) (Exhibit 2.4). The percentage of firms with many younger workers that offer health benefits is similar to the 23% reported in 2013.
- In 2014, 55% of firms offer health benefits not statistically different from the 57% reported in 2013 (Exhibit 2.1).1
- Ninety-eight percent of large firms (200 or more workers) offer health benefits to at least some of their workers (Exhibit 2.3). In contrast, only 54% of small firms (3-199 workers) offer health benefits in 2014. The percentage of both small and large firms offering health benefits to at least some of their workers is similar to last year (Exhibit 2.2).
- Between 1999 and 2014, the offer rate for large firms (200 or more workers) has consistently remained at or above 97%.
- Since most firms in the country are small, variation in the overall offer rate is driven primarily by changes in the percentages of the smallest firms (3-9 workers) offering health benefits. For more information on the distribution of firms in the country, see the Survey Design and Methods Section and Exhibit M1.
- As the “employer shared responsibility” provision takes effect in 2015, some employers may adjust their workforce’s employment status to mitigate the provision’s impact. Starting in 2015, employers with more than 100 full time equivalents2 who do not offer their full-time employees coverage will pay a penalty if one of their employees receives a premium subsidy on a health insurance exchange. Employers will be charged a penalty of $2,000 for each employee beyond their first 30 employees if they do not offer coverage. For example, a firm with 65 employees would be charged $70,000 annually for not offering coverage (35 employees multiplied by $2,000 per employee). Employers that offer coverage may still be assessed a penalty if the coverage is either too expensive or does not meet minimum standards. Coverage offered by an employer must pay for 60% of a population’s covered medical expenses. In addition, the worker contribution to the premium cannot exceed 9.5% of the household’s income.
- Ninety-four percent of firms with 100 or more employees offered health benefits to at least some of their employees in 2014. Ninety percent of firms with between 50 and 99 workers offered benefits to at least some workers. Since the survey does not ask employers how many full-time equivalents they have, these firm size categories are determined by the number of workers at a firm and may include both full-time and part-time employees.
Part-Time and Temporary Workers
- Among firms offering health benefits, relatively few offer benefits to their part-time and temporary workers.
- A small percentage (5% in 2014) of firms offering health benefits have offered them to temporary workers (Exhibit 2.6). The percentage of firms offering temporary workers benefits are similar for small firms (3-199 workers) and larger firms (5% vs. 9%) (Exhibit 2.8). The percentage of firms offering health benefits to temporary workers has remained stable over time.
Dental and Vision Benefits
- Fifty-three percent of firms offering health benefits offer or contribute to a dental insurance benefit for their employees that is separate from any dental coverage the health plans might include. This is not statistically different from the 54% reported in 2012, which is the last time the survey asked about dental benefits (Exhibit 2.10). Large firms (200 or more workers) are far more likely than smaller firms to offer or contribute to a separate dental health benefit (88% vs. 52%) (Exhibit 2.9).
- Thirty-five percent of firms offer or contribute to a vision benefit for their employees that is separate from any vision coverage the health plan might include, which is not statistically different than the 27% we reported in 2012 but higher than 17% in 2010 (Exhibit 2.10).
- Large firms (200 or more workers) are more likely than smaller firms to offer or contribute to a separate vision care benefit, at 63% versus 34% (Exhibit 2.9).
Spouses, Dependents and Domestic Partner Benefits
The vast majority of firms offering health benefits offer benefits to spouses and dependents, such as children.
- In 2014, 96% of small firms (3 to 199 workers) and 99% of larger firms offering health benefits offer coverage to spouses. Similarly, in 2014, 92% of small firms and 99% of large firms offering health benefits cover other dependents, such as children. Four percent of small firms offering health benefits do not offer coverage to any dependents (Exhibit 2.11).
- This year we asked employers whether same-sex and opposite-sex domestic partners were allowed to enrolled in a firm’s coverage. While definitions may vary, employers often define domestic partners as an unmarried couple who have lived together for a specified period of time. Firms may define domestic partners separate from any legal requirements a state may have. Employers may have a different policy in different parts of the country.
- In 2014, 39% of firms offering health benefits offered coverage to unmarried opposite-sex partners, similar to the 37% who did so in 2012, the last time this question was asked). In 2014, 39% of firms offering benefits covered same-sex domestic partners, unchanged from the 31% in 2012 (Exhibit 2.13).
- The rates at which firms have offered domestic partner benefits have increased over a longer period of time. For example, in 2014, 39% of firms offered benefits to same-sex domestic partners, a significant increase from the 22% that did so in 2008. The percentage of offering firms which covered opposite-sex domestic partner benefits has also increased from 24% in 2008 to 39% in 2014.
- When we ask employers if they offer health benefits to opposite or same-sex domestic partners, many firms report that they have not encountered the issue of whether benefits would be offered to domestic partners. At many small firms (3-199 Workers), the firm may not have formal HR policies on domestic partners simply because none of the firm’s employees have asked to cover a domestic partner. Regarding health benefits for opposite-sex domestic partners, 34% of firms report in 2014 that they have not encountered this need or that the question was not applicable. The vast majority of firms in the United States are small business; 61% of firms have between 3 and 9 employees and 98% have between 3 and 199 employees. Therefore statistics about the percentage of firms that offer domestic partner benefits is largely controlled by small businesses. More small firms (35%) compared to large firms (3%) indicate that they have not encountered this need or that the question was not applicable (Exhibit 2.12). Regarding health benefits for same-sex domestic partners, 41% of firms report that they have not encountered the need or that the question was not applicable. More small firms (3–199 workers) (42%) than larger firms (5%) report that they have not encountered the issue of offering benefits to same-sex domestic partners (Exhibit 2.12).
- Firms in the Northeast are more likely (60%) and firms in the South are less likely (25%) to offer health benefits to unmarried same-sex domestic partners than firms in other regions (Exhibit 2.12). Firms in the Northeast are more likely (50%) to offer health benefits to unmarried opposite-sex domestic partners than firms in other regions (Exhibit 2.12).
- Firms in the state and local government industry are less likely to offer either same sex or opposite sex domestic partner benefits than firms in other industries (Exhibit 2.12).
- Firms may adjust their eligibility for some dependents based on whether the dependent has another offer of coverage.
- Among firms offering coverage to spouses, spouses are not eligible to enroll for coverage if they are offered health insurance from another source at nine percent of firms (Exhibit 2.14).
- Five percent of firms offering coverage to spouses require a greater contribution for coverage if a spouse is offered health insurance from another source. Large employers (200 or more workers) are more likely than small employer to have this requirement (9% vs. 5%) (Exhibit 2.14).
Firms Not Offering Health Benefits
- The survey asks firms that do not offer health benefits if they have offered insurance or shopped for insurance in the recent past, and about their most important reasons for not offering coverage. Because such a small percentage of large firms report not offering health benefits, we present responses for smaller firms (3 to 199 workers) that do not offer health benefits.
- The cost of health insurance remains the primary reason cited by firms for not offering health benefits. Among small firms (3-199 workers) not offering health benefits, 32% cite high cost as “the most important reason” for not doing so, followed by “employees are generally covered under another plan” (24%) (Exhibit 2.15). This year we asked employers whether the launch of the health insurance exchanges for individuals was the primary reason for not offering benefits; nine percent of employers cited “employees have other options, including exchanges” and one percent said “employees will get a better deal on the health insurance exchanges” (Exhibit 2.15). More small firms indicated they did not offer because of “cost” and “employees are generally covered under another plan” than “employees have other options, including exchanges”.
- Many non-offering, small firms have either offered health benefits in the past five years, or shopped for alternative coverage options recently.
- Eighteen percent of non-offering, small firms (3-199 workers) have offered health benefits in the past five years, while 24% have shopped for coverage in the past year (Exhibit 2.16). The 24% of non-offering small firms which have shopped for coverage in the past year is similar to the 18% who did so last year.
- Among non-offering, small firms (3-199 workers), 7% report that they provide funds to their employees to purchase health insurance through the individual, or non-group, market, such as on an individual health insurance marketplace (Exhibit 2.17). The percentage of firms offering funds to purchase non-group coverage is similar to last year (10%).
- Three-quarters of small firms (3-199 employees) not offering health benefits believed that their employees would prefer a two dollar per hour increase in wages rather than health insurance (Exhibit 2.18). The percentage of small employers who believe that their employees would prefer a wage increase is the same as 2011 the last time the survey asked this question (75%).
- Small firms (3-199 workers) not offering health insurance gave a variety of estimates regarding the amount they believe the firm could afford to pay for health insurance for an employee with single coverage. Thirty-nine percent reported that they could pay less than $100 per month; 6% reported that they could pay $400 or more per month (Exhibit 2.19).
- Small firms (3-199 workers) not offering health benefits were asked to estimate what percentage of their employees had coverage from another source. Fifty percent of small employers estimated that three quarters or more of their employees were covered (Exhibit 2.20). On average, non-offering firms with between 3-9 employees believed that 75% of their employees had another source of coverage, 58% at firms with 10 to 24 employees, and 44% at firms with 25 to 199 employees.
Small Business Health Options Program (SHOP) are federal or state sponsored exchanges in which employers may offer and contribute to health insurance provided to their employees. In many states SHOP exchanges were not fully implemented and many employers experience technical difficulties when trying to enroll. Small employers may qualify for the small business health care tax credit when purchase coverage through the SHOP exchanges. In 2014, firms with 50 or fewer full-time equivalents are eligible to participate in a SHOP exchange.
- Because our survey gathers information about the total number of full-time and part-time employees in a firm, we cannot calculate the number of full-time equivalent employees and therefore could not limit survey responses only to firms within the size range eligible for the SHOP marketplaces. To ensure that we included employers that may have a number of part-time or temporary employees but could still qualify, we directed questions to employers with 3 to 75 total employees. This approach allowed us to capture some employers with more than 50 employees who would nonetheless be eligible, but it also means that that some employers who are unlikely to be eligible were asked these questions.
- Thirteen percent of firms with 3 to 75 employees who do not offer health benefits said they looked at purchasing coverage on a SHOP exchange. Similarly, twelve percent of firms with 3 to 75 employees that do offer health benefits looked at coverage on the SHOP exchanges (Exhibit 2.21).
- Among non-offering firms with 3 to 75 employees that chose not to purchase coverage on a SHOP exchange, 40% reported they did not do so because they were not interested and 28% said it was too expensive (Exhibit 2.22).