Small Business Health Insurance at Risk as Costs Rise: EBRI Report

The landscape of employer-sponsored health insurance is shifting, with a growing divide emerging between large and small businesses. While employment-based health insurance remains the dominant form of coverage for working-age Americans – covering roughly 60% of the population – recent data indicates a concerning trend: small employers are increasingly pulling back from offering health benefits.

Small Business Strain

Coverage Trends

The share of employers offering health coverage inched up to 49% in 2024, a slight increase from 46.3% the previous year. However, this overall gain masks a significant disparity. The Employee Benefit Research Institute (EBRI) found that these gains were limited to larger companies – those with over 100 employees – while coverage among smaller employers decreased.

Did You Know? The average cost of employer-sponsored health insurance reached $17,496 in 2025, representing a 6% increase over the prior year.

EBRI’s research highlights that the overall trend is heavily influenced by the actions of small businesses, which constitute the majority of employers in the United States. This suggests that the challenges faced by small employers are disproportionately impacting the availability of health insurance coverage.

Financial Pressures

Paul Fronstin, director of health benefits research at EBRI, cautioned that rising health insurance premiums could further exacerbate the problem. He stated that if premiums continue to outpace wage and general inflation, small employers will likely experience intensified financial strain, potentially accelerating the decline in health plan sponsorship for companies with fewer than 100 workers.

Expert Insight: The increasing financial burden on small businesses raises concerns about access to healthcare for a significant portion of the workforce, potentially leading to greater reliance on public programs and increased financial insecurity for individuals.

Shifting Costs and Potential Consequences

Large employers, while maintaining coverage rates, may respond to rising costs by shifting more expenses onto employees through higher deductibles, coinsurance, or more restrictive networks. This could preserve the offer of coverage but reduce its value, potentially discouraging employees from utilizing their benefits.

According to Fronstin, this shift could lead to higher out-of-pocket costs for workers, increased reliance on public programs, and greater financial insecurity related to healthcare expenses.

Looking Ahead

If cost trends continue as projected, with healthcare costs expected to climb another 6.7% in 2026, small employers could face even greater pressure to reduce or eliminate health benefits. This could lead to a further decline in employer-sponsored coverage and a corresponding increase in the number of uninsured Americans. Alternatively, larger employers may continue to absorb costs, but potentially at the expense of employee benefits and affordability.

Frequently Asked Questions

What percentage of the nonelderly population currently receives health insurance through their employer?

Approximately 60% of the nonelderly population receives health insurance through their employer, according to recent research from EBRI.

Did the percentage of employers offering health coverage increase or decrease in 2024?

The share of employers providing coverage inched upward to 49% in 2024, from a near record low of 46.3% the year before.

Which size of employer is most responsible for the decline in health coverage offerings?

Small employers are largely responsible for the decline in coverage, according to EBRI.

How might rising healthcare costs impact your business or personal healthcare decisions in the coming years?