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Study: Half of workers at small businesses lack health insurance benefits Posted: February 20th, 2013

By Maryalene LaPonsie

Large businesses do a better job than small businesses when it comes to providing medical insurance benefits for their employees. A recent study from The Commonwealth Fund, a private foundation focused on health policy, reveals a significant gap in health insurance coverage based upon firm size and worker income.

In addition, the study says reforms from the Patient Protection and Affordable Care Act may make it easier for small businesses to offer coverage to their employees in the future.

Medical insurance dropped by many small businesses

According to The Commonwealth Fund study, only 49 percent of workers in small businesses - defined as those with less than 50 employees - were offered and were eligible for health insurance benefits in 2010. That number is down from 58 percent of workers at small businesses in 2003.

Meanwhile, workers at large businesses employing more than 100 workers have fared better. In 2010, 90 of these workers had been offered and were eligible for health insurance coverage through their workplace, a number that has remained constant since 2003.

Low-wage workers most likely to lack health insurance coverage

A lack of access to group health insurance plans appears to be especially acute among low-wage workers employed by small businesses. Of those making less than $15 an hour, only one-third were offered and eligible for health insurance benefits. That number jumped to 70 percent for those earning more than $15 an hour at small firms.

Not surprisingly, low-wage workers tend to report more difficulty paying for medical expenses than higher paid workers. In addition, those who do not have access to medical insurance through work often have difficulty finding coverage elsewhere.

  • 54 percent of low-wage workers at small businesses skipped medical care because of the cost
  • 52 percent of low-wage workers at small businesses reported problems with medical bills
  • 55 percent of those not offered or eligible for medical insurance through work say it is very difficult or impossible to find affordable health insurance on their own.

Health care reform hoped to create low cost health insurance

Within the study, The Commonwealth Fund notes reforms scheduled as part of the Patient Protection and Affordable Care Act should help more small businesses offer health insurance coverage to their workers.

In 2010, 170,300 small businesses claimed newly available tax credits to offset the cost of health insurance coverage for 770,000 workers. In 2011, the number of businesses claiming tax credits grew to 360,000 firms covering 2 million employees.

Even for those workers who are not employed by firms receiving tax credits, The Commonwealth Fund notes many may benefit from individual health insurance subsidies expected to go into effect in 2014.

At that time, most of the current 27.6 million uninsured workers with low or moderate incomes should be eligible for government subsidies to help them purchase affordable health insurance through state-based exchanges.