In 2011, almost 115 million adults and just over 38 million children received health insurance through an employer, making it the most common form of coverage in the United States. 1 Employers offer benefits voluntarily, often to attract and retain qualified workers while providing their employees with some financial protection against injury or illness. The employer contribution to the premium lowers the cost for the family, enabling many to purchase coverage that would otherwise have been unaffordable. In addition, the coverage tends to be more generous than what is available in the individual market and the employer contribution towards premiums is tax-exempt. Employer-sponsored coverage (ESI) also has the added benefit of pooling the health risks of a diverse workforce, particularly for larger employers.

During the last decade, however, the percentage of all workers who had coverage through their jobs declined 6 percentage points, so that just 71 percent had ESI in 2010.  Lower-income workers, those with income below 138% FPL, experienced even steeper declines; slumping 9 percentage points so that only 29 percent had coverage through their job in 2010.2 The decline is driven, in large part, by increases in the cost of ESI. For example, between 2001 and 2011 the total premium for family-based ESI coverage increased from $7,061 to $15,073 or 113%.3

The amount of the cost of premiums that employees contribute has almost doubled over the same time period (although the employee share has remained relatively constant at about 27 percent).4  Such premium increases have outpaced the growth in workers’ earnings, which increased only 33 percent from 2001 to 2011.5

Dependent Coverage 

There is no requirement that employers offer family coverage (or coverage at all), and employers can decide how much, if anything, they will contribute to the cost of coverage for dependents. In general, the ESI system is family-based and most employers offer coverage to the dependents of their workers, including spouses and children, at an increased cost to the employee.

For many years, young adults between the ages of 19 and 29 made up the largest portion of the uninsured.6  Commonly, children who are covered by their parents through ESI, would lose dependent health care coverage when they are 19 or are no longer a full-time student. However, under the Affordable Care Act, young adults up to age 26 can now be covered through a parent’s plan. The number of 19-25 year olds who report being uninsured at some point during the previous 12 months, has decreased by 1.5 million, or 5.6 percentage points since 2010, the year the law went into effect. 7

Data

The following tables provide state-specific data on employer-sponsored insurance coverage, using the Medical Expenditure Panel Survey (MEPS); and wage data from the Bureau of Labor Statistics Quarterly Census of Employment and Wages (QCEW). The national data is taken from the Kaiser Family Foundation & Health Research and Educational Trust’s annual Employer Health Benefits Survey, which does not provide state-specific data.

Notes

1. Center for Children and Families estimates based on the U.S. Census Bureau’s 2011 American Community Survey.

2.  J. Holohan & V. Chen, “Declining Health Insurance in Low-Income Working Families and Small Businesses,” Kaiser Family Foundation (May 2012).

3. The Kaiser Family Foundation and Health Research and Educational Trust, “Employer Health Benefits: 2011 Annual Survey,” (September 2011).

4. Center for Children and Families analysis of Kaiser Family Foundation and Health Research and Educational Trust, “Employer Health Benefits: 2011 Annual Survey,” (September 2011).

5. Center for Children and Families estimates based on the Bureau of Labor Statistics, seasonally adjusted data from the Current Employment Statistics Survey, 2011-2011 (April to April).

6. S. R. Collins, PhD., R. Robertson, M. Sc., T. Garber, M.P.H., et al., “Young, Uninsured, and in Debt: Why Young Adults Lack Health Insurance and How the Affordable Care Act is Helping,” The Commonwealth Fund (June 8, 2012).

7. The provision of the Affordable Care Act that allows young adults to be enrolled as a dependent on their parent’s health insurance plan went into effect in September 2010.  R. A. Cohen, PhD, M.E. Martinez, MPH, MHSA, “Health Insurance Coverage: Early Release of Estimates from the National Health Interview Survey, 2011,” Centers for Disease Control and Prevention (June 2012).