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Post-ACA, small business still shuns self insurance

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in Compensation and Benefits,Human Resources

Small businesses are not following the lead of bigger firms by self-insuring their health benefits to avoid the costs of the Affordable Care Act (ACA), according to new research by the nonpartisan Employee Benefit Research Institute (EBRI).  

When the ACA was enacted in 2010, many insurance industry experts predicted that more businesses would turn to self insurance to mitigate expected increases in premiums and costs. Large employers have; small employers have not.

In a self-insured group health plan, the employer pays for each claim. That’s in contrast to a fully insured plan, in which the employer pays a fixed premium to an insurance carrier, which pays out claims. Self-insured plans are often less expensive for employers than fully insured plans.

EBRI found that the overall percentage of American workers in self-insured plans has been increasing in recent years. In 2013, 58.2% of workers with health coverage were in self-insured plans, up from 40.9% in 1998. Employers with 1,000 or more workers have driven the upward trend.

However, EBRI found no evidence that smaller firms were increasingly self-insuring: In 2013, only 13.3% of employers with fewer than 100 employees had a self-insured health plan, close to the historical average of 12%.

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