The Decline of Employer Sponsored Health Benefits

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April 18th, 2013

decline employer sponsored health benefitsThe availability of employer-sponsored insurance has fallen by about 10% in the past decade. Reports suggest the decline in employer-sponsored insurance is based on declining  job availability and a sharp increase in the cost of insurance premiums. 

A study by the Robert Wood Johnson Foundation found that employer-sponsored coverage fell from 59% to about 52% between 2000 and 2011. The cost of insurance has also risen dramatically, with the average annual premium for employee-only coverage doubling from $2,490 to $5,081. Family premiums increased 125 percent, from $6,415 to $14,447 in the same time period.

Many wonder, how the health law’s implementation will affect the decline of employer-sponsored coverage.  The Affordable Care Act penalizes companies who do not offer affordable insurance, and provides subsidies for small companies who meet a certain criteria.  Some of the new taxes and regulations are said by many to increase costs.  Higher costs can mean fewer employers offering coverage and fewer employees accepting it when offered. Some employers have said that they may decide to not offer health insurance, and instead pay the insurance mandate penalty, which may be less costly in some scenarios.

The CBO stated that between 3 and 5 million people will no longer have employer-sponsored insurance after the full implementation of the health law.  However, a Towers Watson survey of 500 companies reported that those with more than 1,000 employees have no plan of dropping insurance coverage because of the law.  Other studies suggest that companies could save $26.8 billion by dropping health insurance and paying the $2,000 insurance penalty instead. Only time will tell how the PPACA will ultimately affect employer-sponsored coverage.


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