Small Businesses Get a Bum Rap on Health Benefits

Conventional wisdom has it that small businesses lag way behind big companies in providing health care benefits to employees. A new study shows how wrong conventional wisdom can be.

Survey data from United Benefit Advisors reveals that small employers, those with less than 100 employees, are keeping pace with the average employer.

In n fact, small businesses are doing a better job of containing costs.

Based on the most recent UBA Health Plan Survey, employees across all plan types pay an average of $3,378 toward annual health insurance benefits, with their employer picking up the rest of the total cost of $9,727.

Among small groups, employees pay $3,557, with their employer picking up the balance of $9,474—only a 5.3 percent difference, finds UBA.

“While employers with 500 to 1,000 or more employees may indeed offer better coverage (lower copays, deductibles, in-network out-of-pocket maximums, and monthly premiums), small employers have a lot to offer employees when it comes to wages, purpose, flexibility, etc.,” says Peter Weber, President of UBA.

“Small employers would do well to benchmark their plans against their same-size peers and communicate how competitive their plans are relative to average national costs, deductibles, copays, and more,” Weber said.

Small Businesses Cut a Better Deal

When looking at average annual cost per employee, UBA’s data shows that small businesses actually cut a better deal even when compared to their largest counterparts—their costs are generally below average.

For example, the average annual cost per employee (all plans) is $9,727, but for small groups with 25 to 49 employees, the average cost per employee is only $9,165.

“Keep in mind that relief such as grandmothering and the PACE Act helped many of these small groups stay in pre-ACA plans at better rates, unlike their larger counterparts,” says Weber.

“Generally speaking, however, small businesses are not cutting corners with their coverage. Copays, deductibles, and HSA funding (when offered) are generally in line with average employers.”

United Benefit Advisors (UBA) is an employee benefits advisory organization with more than 200 offices throughout the United States, Canada, and the United Kingdom. Find out more at ubabenefits.com.