Workers at small firms face higher costs for family insurance coverage

A report from the Kaiser Family Foundation showed that workers in firms with between three and 199 workers on average face higher contributions to enroll in family coverage and are more likely to face very high contribution amounts.

The average contribution for a family of four in 2021 was $7,710 for workers in small firms, compared to $5,269 for workers in larger firms. Twenty-nine percent of covered workers in small firms faced a contribution of at least $10,000 for family coverage, compared to only 5% of covered workers in larger firms.

According to the researchers, one reason family contributions may be higher in smaller firms is that some small employers only make a contribution toward the cost of self coverage, leaving the worker to pay the difference between the premium for self coverage and the premium for family coverage. Even in firms selecting less comprehensive coverage, this difference can be many thousands of dollars.
The report states that an estimated 19% of small firms offering health benefits make little or no additional contribution towards the cost of family coverage. These firms employ about 17% percent of the covered workers enrolled at small firms.

Workers in the service industry are more likely to face high contributions for family coverage compared to those in other industries, such as wholesale, transportation, communications, utilities, and government.
The Biden Administration recently issued a proposed rule to make it easier for family members of workers offered health insurance at their jobs to qualify for premium tax credits for Marketplace coverage. Under the ACA, an individual enrolling in a Marketplace plan is not eligible for a premium tax credit if they are eligible for job-based coverage that is considered affordable and provides minimum value (i.e., covers at least 60% of health expenses on average). Current regulations provide that job-based coverage is considered affordable to a worker and their dependents if the cost of self-only coverage for the worker is less than 9.6 percent of family income, without regard to the cost of adding family members. The proposal would revise that interpretation by assessing the affordability of job-based coverage available for the family members of a worker by comparing the total cost for the whole family (including the worker) to the 9.6 percent threshold. This assessment would measure affordability for members of the family other than the worker. Affordability for the worker himself or herself would continue to be based on the cost of self-only coverage.

The report states that an estimated 5.1 million people are currently affected by these cost disparities, and that 12% face a contribution of at least $10,000 for insurance for a family of four. Workers at smaller firms would benefit the most from the new rule, according to the researchers.