Less than half of U.S. small businesses offer benefits to employees, according to research from LIMRA. The firm finds that 47% of those with two to 99 employees offer benefits, the lowest level in two decades.
In its survey of 754 private small businesses, LIMRA spoke to the individuals who made or shared decision-making regarding business insurance and employee offerings. Samples were weighed by company size, industry and region based on U.S. Census Bureau data.
Seventy-eight percent of small American businesses are family-owned, LIMRA reports, and such firms had a sharper decline in benefit penetration (47% down to 40%) than non-family-owned ones between 2005 and 2012. Female-owned businesses, which accounted for a quarter of the total, tend to be smaller, produce less revenue and are less likely to offer insurance benefits than male-owned firms (37% versus 50%).
"The recession has had an impact on smaller employers' ability to offer benefits, particularly those with fewer than 10 employees," says Kim Landry, LIMRA product research analyst. "The weak economy caused a lot of small firms to close, while the new firms cropping up to replace them are less likely to offer benefits. Many small businesses are also hesitant to add new benefits until the economy improves."
Landry says that among those who do still offer benefits, health care and pharmacy remains the most popular by far, as well as the most common.
"These benefits provide an opportunity for small business owners to obtain coverage not only for their employees, but also for themselves and their families," notes Landry. "We also found dental and vision coverage to be common offerings among small businesses, as these products tend to be very popular with employees."
Life insurance also is offered frequently, because of its low cost and ease of administration, LIMRA reports. Accident insurance and short- and long-term disability, however, have what LIMRA calls fairly low penetration rates.
Census Bureau data reveal that 35% of the U.S. workforce is in small businesses, which account for 98% of American companies.
Sound off!
Here's what readers had to say about this story on our website at ebn.benefitnews.com and on our LinkedIn group:
"For most business that offer benefits, benefit costs have become a progressively larger component of total business expenditures. ... Businesses have coped with this in a variety of ways; by introducing wellness programs, by instituting consumer-driven health care approaches, and by shifting cost to employees. Voluntary benefits have become much more popular as a way for an employer to bring benefit value to their workforce without adding expenses." -Barry Lundquist, president, Council for Disability Awareness, on LinkedIn
"The promise of Obamacare was that families and employers would, at this point, start to see a $2,500 reduction in cost of family coverage. Unfortunately the opposite has been true with costs increasing by about that $2,500 instead. This, coupled with the slow to nonexistent economic recovery and the uncertainty around tax rates, the fiscal cliff debacle, and the huge burdens of new regulatory and administrative policies, have created a toxic environment where they are in survival mode. ... Exiting benefits is one way to help keep the doors open." -Peter Hayes, principal, Healthcare Solutions, on LinkedIn
"It will be a value-added service for employees when their employers care enough to invite brokers to do educational presentations [about] voluntary benefits. ... This way, employees themselves can make the decision to purchase the service or not." -posted by Choon M on the website.
