Less than Half Of Small Businesses Offer Employee Benefits

Only 47 percent of small businesses (those with two to 99 employees) in the U.S. offer benefits to their employees, according to research from research, consulting, and professional development organization LIMRA. The study noted that according to the Census Bureau, 98 percent of businesses in the U.S. have fewer than 100 employees, accounting for approximately 35 percent of the U.S. workforce

“The recession has had an impact on smaller employers’ ability to offer benefits, particularly those with fewer than ten employees,” said Kim Landry, research analyst at LIMRA. “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.”

Among those 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 implement. The survey found that 44 percent of all small employers offered health benefits to employees. However, this increases with firm size: 84 percent of firms with 50 to 99 employees offered health benefits to employees.

In addition, 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.

The survey contains responses from 754 private small businesses in the U.S. For more information, visit http://www.limra.com.

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