BLS data: small employer rates up, participation down

The struggle continues for small employers: rates are up, employee contributions are up, participation is down.

The Bureau of Labor Statistics released a report on small employer medical cost and participation yesterday (find it here: https://lnkd.in/eAfPk9em).

The report discussed the change year over year in access, participation, and take rate since 2014.

- Access Rate: the percentage of workers with an employer sponsored benefit in which they can enroll.

- Take-up Rate: the percentage of workers among those with access to an employer-sponsored benefit who choose to participate in the benefit.

- Participation Rate: the percentage of all workers, regardless of access, who enroll in a plan.

What jumps out at me the most is the knee in the curve in 2020.

From 2014-2019, the participation rate averaged 71%.

From 2020-2024, the participation rate averaged 63%, declining each year and hitting 60% in 2024. In that same time, the overall participation rate dropped from 38% to 33%.

Where’d those employees go?

My theory? Employees at small employers are going on the marketplace and taking the enhanced subsidies, even though they’re not eligible, because there’s no employer reporting that would catch them.

What do you think? Where did 5% take up among employees in small employers go?

If my theory is right, is that enough of a spend on ill-gotten subsidies to justify a small employer reporting regime?