Benefits October 15, 2002

Small Employers Pass Health Cost Rise on to Employees

October 15, 2002 (PLANSPONSOR.com) - Small business employers are more often passing benefit premium increases off to their employees than their large business counterparts, according to a new study.
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The report by the Center for Studying Health System Change, a non-partisan study group, said rising health insurance costs will increasingly affect the more that 46 million Americans who work for small firms.  

Among the actions that affect employees’ costs and benefits are:

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  • Increasing employee share of the premium
  • Reducing services covered
  • Tightening eligibility requirements
  • Increasing employee cost sharing
  • Dropping contributions for dependent coverage

Still, small employers are not likely to drop coverage alltogether and do more than large business to reduce participant cost.  

However, one cost-reducing measure is switching plans. While this reduces employer premiums, it can disrupt relationships between patients and physicians. Many participants then themselves paying full price to remain with their physician.

The center said some fear that the continued slow down in the economy may force many small businesses to scale back coverage even more, or failing that, drop coverage altogether.

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