Small Businesses Cut Benefits, Shift Health Costs to Employees

Many small businesses, despite increased health insurance premiums, continue to offer coverage to employees by "cutting benefits and shifting more costs onto their workers," the New York Times reports.

Some small businesses have begun to offer health plans with high deductibles -- between $2,500 and $5,000 -- to prompt employees to use fewer services and reduce their health care costs.

According to a recent survey of 3,000 businesses conducted by Mercer Human Resources Consulting, such plans reduced their share of the cost of premiums to an average of $5,770 per employee, about $1,000 less than their share under traditional plans.

In addition, some small businesses have begun to offer limited-benefit plans. Such plans might cover hospitalizations but not routine care, provide a limited number of physician visits but not hospitalizations, or cap annual benefits at $50,000.

Some small businesses also have begun to require employees to cover the full cost of health insurance premiums, and others have begun to offer preventive care programs to reduce their health care costs (Hawthorne, New York Times, 9/26).