Smallest Employers Lukewarm on Health Plans

April 17, 2002 ( - Small businesses are less likely to offer health insurance benefits than larger ones, and small employers that don't offer health plans are also less likely to offer other benefits, such as retirement plans or life insurance, a new survey finds.

The survey, by the California HealthCare Foundation and William M. Mercer, also found that of the 70% of California’s small business owners that offer some type of health insurance:

  • only 64% of the smallest companies surveyed, those with between 2 and 9 employees, offered a health benefit,
  • compared to 90% of companies with between 25 and 30 employees

Small business owners that did not offer insurance tended to rely heavily on a part-time workforce – companies with workforces composed of 30% or more of part-time workers tended not to offer insurance, versus 17% of larger companies.

Furthermore, small businesses that offered insurance tended to be older than those that did not. Some 42% of small owners in business for 20 years or more offered insurance, while only 23% of those with less than seven years in business did so.

Businesses that did not offer health insurance were more likely to believe that offering insurance was not important and beneficial to business. They also tended to underestimate its cost.

Regardless of whether businesses offered health insurance or not, most knew relatively little about regulatory protections, tax deductibility of insurance premiums and market options.