Only 47% of small businesses (2-99 employees) in the United States offer benefits, the lowest level in two decades of LIMRA research. According to the U.S. Census Bureau, 98% of businesses in the U.S. have fewer than 100 employees, accounting for approximately 35% of the U.S. workforce. Kim Landry, a research analyst with LIMRA said, “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.”
LIMRA’s study found that 78% of small businesses in the U.S. are family-owned. Family-owned firms experienced a sharper decline in benefit penetration between 2005 and 2012 than did non-family-owned firms, with only 40% offering insurance benefits in 2012 compared with 47% in 2005.
One quarter of small businesses are female-owned. These firms tend to be smaller, produce lower revenue than male-owned firms, and less likely to offer insurance benefits (37% versus 50% of male-owned small businesses).
Among small businesses that do offer insurance benefits to their employees, medical and prescription drug plans are by far the most popular, and tend to be the first benefits that companies bring on board, Landry noted, “These benefits provide an opportunity for small business owners to get coverage not only for their employees, but also for themselves and their families. We also found dental and vision coverage to be common offerings among small businesses, as these products tend to be very popular with employees.”
LIMRA found that life insurance is frequently offered by small firms, whose preference for this benefit is most likely associated with its low cost and ease of administration. However, products, such as long-term disability, short-term disability, and accident insurance have fairly low penetration rates among small businesses, leaving employees vulnerable to a variety of financial risks. For More information, visitwww.limra.com.
