2017 Employer Health Benefits Survey
Section 3: Employee Coverage, Eligibility, and Participation
Employers are the principal source of health insurance in the United States, providing health benefits for about 151 million non-elderly people in America.16 Most workers are offered health coverage at work, and the majority of workers who are offered coverage take it. Workers may not be covered by their own employer for several reasons: their employer may not offer coverage, they may not be eligible for the benefits offered by their firm, they may elect to receive coverage through their spouse’s employer, or they may refuse coverage from their firm. Before eligible workers may enroll, about three-quarters (76%) of covered workers face a waiting period.
ELIGIBILITY
- Not all workers are eligible for the health benefits offered by their firm, and not all eligible workers “take up” (i.e., elect to participate in) the offer of coverage. The share of workers covered in a firm is a product of both the percentage of workers who are eligible for the firm’s health insurance and the percentage that choose to take up the benefit. The percentage of workers eligible for health benefits at offering firms in 2017 is similar to last year and the recent past for both small and large firms [Figure 3.1].
- Seventy-nine percent of workers in firms offering health benefits are eligible for the coverage offered by their employer. The percentage of eligible workers is higher in small firms with 3-24 workers (84%) than other firm sizes [Figure 3.2].
- Eligibility varies considerably by firm wage level. Workers in firms with a relatively large share of lower-wage workers (where at least 35% of workers earn $24,000 a year or less) are less likely to be eligible for health benefits than workers in firms with a smaller share of lower-wage workers (68% vs. 81%) [Figure 3.3].
- Workers in firms with a relatively large share of higher-wage workers (where at least 35% earn $60,000 or more annually) are more likely to be eligible for health benefits than workers in firms with a smaller share of higher-wage workers (88% vs. 73%) [Figure 3.3].
- Eligibility also varies by the age of the workforce. Those in firms with a relatively small share of younger workers (where fewer than 35% of the workers are age 26 or younger) are more likely to be eligible for health benefits than those in firms with a larger share younger workers (81% vs. 64%) [Figure 3.3].
- The average eligibility rate is particularly low in retail firms (54%) [Figure 3.2].
Figure 3.1: Eligibility, Take-Up Rate, and Coverage for Workers In Firms Offering Health Benefits, by Firm Size, 1999-2017
Figure 3.2: Eligibility, Take-Up Rate, and Coverage In Firms Offering Health Benefits, by Firm Size, Region, and Industry, 2017
Figure 3.3: Among Workers In Firms Offering Health Benefits, Percentage of Workers Eligible for Health Benefits Offered by Their Firm, by Firm Characteristics, 2017
TAKE-UP RATE
- A large share of workers who are offered health benefits at work elect to enroll. In 2017, 78% of eligible workers take up coverage when it is offered to them, similar to last year [Figure 3.1].17 Eligible workers in large firms (200 or more workers) are more likely to take up coverage when offered than eligible workers in small firms (3-199 workers) (79% vs. 75%) [Figure 3.2].
- The likelihood of a worker accepting a firm’s offer of coverage varies by firm wage level. Eligible workers in firms with a relatively small share of lower-wage workers (where fewer than 35% of workers earn $24,000 a year or less) are more likely to take up coverage than eligible workers in firms with a larger share of lower-wage workers (79% vs. 65%) [Figure 3.4].
- Eligible workers in firms with a relatively large share of higher-wage workers (where at least 35% earn $60,000 or more annually) are more likely to take up coverage than those in firms with a smaller share of higher-wage workers (82% vs. 74%) [Figure 3.4].
- Eligible workers in firms with relatively large share of younger workers (where at least 35% of the workers are age 26 or younger) are less likely to take up coverage than those in firms with a smaller share of younger workers (70% vs. 79%) [Figure 3.4].
- The percentage of eligible workers taking up benefits in offering firms also varies by industry, with a lower average take-up rate at retail firms (63%) and a higher average take-up rate at state and local governments (89%) [Figure 3.2].
- The share of eligible workers taking up benefits in offering firms (78%) has decreased over time, from 81% in 2012 and 82% in 2007.
Figure 3.4: Among Workers In Firms Offering Health Benefits, Percentage of Eligible Workers Who Take Up Health Benefits Offered by Their Firm, by Firm Characteristics, 2017
COVERAGE
- The percentage of workers at firms offering health benefits that are covered by their firm’s health plan in 2017 is 62%, the same percentage as last year [Figure 3.1].
- The coverage rate at firms offering health benefits is the same for small firms and large firms in 2017. These rates are similar to the rates last year for both small firms and large firms [Figure 3.1].
- There is significant variation by industry in the coverage rate among workers in firms offering health benefits. The average coverage rate is particularly low in retail (34%) and service (57%) industries [Figure 3.2].
- Among workers in firms offering health benefits, those in firms with a relatively large share of lower-wage workers (where at least 35% of workers earn $24,000 a year or less) are less likely to be covered by their own firm than workers in firms with a smaller share of lower-wage workers (44% vs. 64%). A comparable pattern exists in firms with a relatively large share of higher-wage workers (where at least 35% earn $60,000 or more annually), with workers in these firms being more likely to be covered by their employer’s health benefits than those in firms with a smaller share of higher-wage workers (72% vs. 54%) [Figure 3.5].
- Among workers in firms offering health benefits, those in firms with a relatively small share of younger workers (where fewer than 35% of the workers are age 26 or younger) are more likely to be covered by their own firm than those in firms with a larger share of younger workers (64% vs. 45%) [Figure 3.5].
- Among workers in all firms, including those that offer and those that do not offer health benefits, 55% of workers are covered by health benefits offered by their employer, the same percentage as last year. The coverage rate in 2017 is lower than the coverage rate in 2007 (59%).
Figure 3.5: Among Workers In Firms Offering Health Benefits, Percentage of Workers Covered by Health Benefits Offered by Their Firm, by Firm Characteristics, 2017
Figure 3.6: Percentage of All Workers Covered by Their Employer’s Health Benefits, Both In Firms Offering and Not Offering Health Benefits, by Firm Size, 1999-2017
WAITING PERIODS
- Waiting periods are a specified length of time after beginning employment before workers are eligible to enroll in health benefits. With some exceptions, the Affordable Care Act requires that waiting periods cannot exceed 90 days.18 For example, employers are permitted to have orientation periods before the waiting period begins which, in effect, means a worker is not eligible for coverage 3 months after hire. If a worker is eligible to enroll on the 1st of the month after three months of employment, this survey rounds up and considers the firm’s waiting period four months. For these reasons, some employers still have waiting periods exceeding the 90-day maximum.
- Seventy-six percent of covered workers face a waiting period before coverage is available, similar to last year [Figure 3.9]. Covered workers in small firms are more likely than those in large firms to have a waiting period (84% vs. 73%) [Figure 3.7].
- The average waiting period among covered workers who face a waiting period is 1.9 months [Figure 3.7]. A small percentage (2%) of covered workers with a waiting period have a waiting period of more than 3 months.
- Respondents with waiting periods greater than 4 months generally indicated that employees had training or orientation periods, or measurement periods in which they were employees but were not eligible for health benefits. Some employers have measurement periods to determine whether variable hour employees will meet the requirements for the firm’s health benefits.19
Figure 3.7: Percentage of Covered Workers In Firms With a Waiting Period for Coverage and Average Waiting Period In Months, by Firm Size, Region, and Industry, 2017
Figure 3.8: Distribution of Covered Workers With the Following Waiting Periods for Coverage, 2017
Figure 3.9: Percentage of Covered Workers In Firms With a Waiting Period for Coverage and Average Waiting Period In Months, by Firm Size, 2002-2017
AUTO ENROLLMENT
- Thirty-one percent of firms offering health benefits, including 35% of firms with 3 to 49 workers and 18% of firms with 5,000 or more workers, automatically enroll eligible workers in health benefits after any applicable waiting period [Figure 3.10].
Figure 3.10: Among Firms Offering Health Benefits, Percentage of Firms That Automatically Enroll Eligible Workers In Health Benefits, by Firm Size, 2017
- Kaiser Commission on Medicaid and the Uninsured. The uninsured: A primer—Key facts about health insurance and the uninsured in the wake of national health reform [Internet]. Washington (DC): The Commission; 2016 Nov [cited 2016 Aug 1]. http://www.kff.org/uninsured/report/the-uninsured-a-primer-key-facts-about-health-insurance-and-the-uninsured-in-the-wake-of-national-health-reform/. See supplemental tables – Table 1: 270.2 million non-elderly people, 55.5% of whom are covered by ESI.↩
- In 2009, Kaiser/HRET began weighting the percentage of workers that take up coverage by the number of workers eligible for coverage. The historical take up estimates have also been updated. See the Survey Design and Methods section for more information.↩
- Variable hour employees may have a measurement period of up to 12 months before it is determined if they are eligible for benefits. Employers may require a cumulative service requirement of up to 1,200 hours before an employee may enroll. Federal Register. Vol. 79, No. 36. Feb 12, 2014. https://www.gpo.gov/fdsys/pkg/FR-2014-02-24/pdf/2014-03809.pdf↩
- Under the ACA, employers may determine whether or not an employee is a full-time employee by looking back at the number of hours an employee has worked during a defined period. See https://www.irs.gov/affordable-care-act/employers/identifying-full-time-employees↩