Why Few Small Firms Offer Health Benefits

By RICHARD BREEDEN
Staff Reporter of The Wall Street Journal.

From The Wall Street Journal Online

Less than half of all small companies, 47.6%, offer health insurance to their employees, and the relative size of a small business often makes the difference in whether coverage will be available.

Of companies with fewer than 10 employees, 41% have insurance plans, while 79% of the companies with 20 or more workers offer health coverage, according to a poll conducted by the National Federation of Independent Business.

Although offering a choice of types of health insurance is common among large businesses, 83% of the small companies that did have health insurance offered only a single plan. Preferred Provider Organizations, or PPOs, were the most popular, offered by about 46% of the small companies with insurance, whether tiny or with more than 200 employees. (A PPO is like traditional insurance, but an employee pays less for service if it's on an approved list.) Most of the other companies offered traditional insurance, 24%, or HMOs, 23%.

The average monthly cost for the coverage -- including employer- and employee-paid premiums -- was $402 for single coverage and $732 for family plans.

Owners that did offer health insurance cited three reasons: it's the "right thing to do"; to keep workers; and as a way to get their own insurance. Those who had no insurance for their employees said cost and lack of demand among workers were two major reasons they hadn't provided coverage.

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