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CCH® BENEFITS — 4/16/08

Family Insurance Coverage Declines, Dependent Coverage Better In Large Firms, Says SBA Study

From Spencer's Benefits Reports: Family health insurance coverage among all employers is declining and firms are shifting costs for their workers’ coverage to other employers, both large and small, according to a survey recently released by the U.S. Small Business Administration’s (SBA) Office of Advocacy.

In Changes in Family Health Insurance Coverage for Small and Large Firm Workers and Dependents: Evidence from 1995 to 2005 (report number 321), issued in March, the SBA reviewed federal government and private nonprofit foundations’ statistics to determine whether the decline in family health insurance coverage at large firms has increased financial pressure on plans sponsored by small firms. Between 2001 and 2005, the SBA observed a drop in the percentage of families with family health insurance coverage, from 41% to 38% across all firm sizes and from 39% to 32% at small firms.

The SBA found that in 2005, workers at small firms who are spouses of workers at large firms were more likely (47% of spouses) than spouses of small-firm workers (23.5%) to be covered as a dependent under the large firm’s plan. Few large firms’ employees were shifting from their own employer’s coverage to dependent coverage under their spouse’s small-firm health care plan, the SBA reported. While large-firm workers who are married to small-firm workers experienced a decline in coverage from work of almost 3%, this same group had an increase of only about 0.8% in coverage through their small firm spouses.

Children are more likely to have dependent coverage if they have one parent working for a large firm—in 2005, 63.7% of children with parents who both worked for small firms had dependent coverage, compared with 78% of children with one parent who worked for a large firm and 81% of children with both parents working for large firms. When both parents work at small firms, nonemployer health care coverage was important, as it reduced the percentage of uninsured children from 16.4% to 11%.

The report also found that across all firm sizes, fewer workers were covered through their own employer’s health care plan, and more increasingly are obtaining coverage as dependents under their spouses’ plans. This trend “implies that workers are concentrating their insurance coverage at fewer firms,” the SBA indicated. This puts more financial pressure on small firms for dependent coverage for children, the SBA reported, and “if coverage through employment continues to decline, small firms that still offer coverage will likely face increasing enrollment of dependents in their plans.”

For more information, visit http://www.sba.gov/advo/research.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

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