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The U.S. Master Pension Guide reflects the latest regulations, rulings and cases for qualified retirement plans, surveying the different type of plans from which an employer may choose, and describing the procedures for obtaining plan qualification.

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CCH® BENEFITS — 7/2/08

Fewer Employees Covered For Health Care In Micro Businesses

From Spencer's Benefits Reports: About 45% of the smallest business owners had health care coverage purchased through the business, through a spouses’s employers’s plan, or through other group coverage such as COBRA, according to a 2008 survey by the National Association for the Self-Employed (NASE). Another 40% purchased individual health insurance coverage.

However, only 18.6% of those owners who buy health coverage through their business also offer that coverage to some or all full-time employees. This is a sharp decrease from just two years ago, when 46.2% of those who bought health coverage through their business also offered that coverage to some or all full-time employees. Only 2.5% offered health coverage to part-time employees, according to the 2008 survey.

The NASE survey included almost 4,000 respondents; about 47% of these were in firms with just one employee, and another 28% were in two-employee firms. The largest respondents had 10 employees, which represented just 1.3% of the total.

The NASE survey showed a significant increase in the percentage spent on health insurance premiums since 2005, with median costs rising from 3.7% of total revenue to 5.5%. Those firms with just one employee had median costs of 7.3% of gross sales, while those with six or more employees had median costs of 2.5% of gross sales.

According to the NASE survey, cost remains the leading barrier to obtaining health insurance through the business, cited by nearly 80% as an important barrier, and by 65.3% as their single most significant barrier. This is similar to the 2005 data, in which 61.8% identified the cost to the business as their leading barrier. The most significant shift was a decline in the number who said they are not interested in offering health insurance or do not feel it is necessary to offer. Only 6% identified this as their primary barrier in 2008 versus 18.2% in 2005.

Health Reform Sought

There was a “clear consensus” in the NASE survey regarding universal health care coverage, with 84.8% of the respondents agreeing that all U.S. citizens should have health coverage. Only 8.6% disagreed, with the remaining 6.6% unsure.

The respondents were equally clear regarding the need for some degree of personal cost responsibility. Most (79.7%) of those who favored universal health care coverage felt the covered individuals should have to pay some portion of their health care costs, regardless of whether coverage is through private insurance or government assistance.

Consensus was not reached however, on the means to achieve universal coverage. The respondents were presented with three health care system structural options and asked to indicate the one they most preferred, as follows:

• The current health care system in which the majority of Americans obtain private health coverage through their employers or, if self-employed, purchase private coverage on their own in the individual and small group health insurance market (preferred by 22.9% of respondents).
• A government-run (universal) health care system in which the federal government negotiates price and benefit options with private insurance carriers. Individuals then select and pay for the coverage of their choice. Every American would be required to purchase some type of health coverage (preferred by 25.4% of respondents).
• A government-run (universal) health care system paid for through taxes, in which everyone is covered by a federal program similar to Medicare (preferred by 24.5% of respondents).

For more information, visit http://www.nase.org/.

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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