Group Coverage

Employer-based Coverage

In March 2008, there were 176.332 million with employer-based coverage (DeNavas-Walt: Table C-1).

Self-Funded ERISA Plans

The federal ERISA law preempts states from regulating such plans offered by private employers (federal, state and local health benefits are not covered by ERISA), thereby allowing such firms to offer standardized benefits across state lines and avoiding having to comply with costly state regulations such as benefits mandates and premium taxes (Pierron: 3).

Self-funded plans covered 55% of those with employer-based coverage in 2008 (Kaiser/HRET: Exhibit 10.1), up from 39% in 1995 (EBRI).

  • Covered Workers. All told, 32.8% of workers are covered by self-funded plans, a total of 47.6 million workers in 2008 (author calculations from Kaiser/HRET exhibits 3.1, 10.1 and M.2). But leaving aside 8.6 million state and local workers in such plans, there were 39.1 million private workers in such plans in 2008.
  • Covered Lives. Using the reported distribution of coverage by 1-person, 2-person and family among firms with 3-199 workers (Kaiser/HRET: Exhibit 3.10), total estimated lives covered by private self-funded plans was estimated to be 80 million in March 2008.

Insured ERISA Plans

  • All employer plans are ERISA plans, but the ERISA preemption of state regulation has been held to apply only to self-insured plans. It does not preempt states from applying regulations to fully insured plans offered by health insurers to employers. Thus, even though such an offered plan is considered an ERISA plan, it nevertheless must conform to whatever state regulations would apply to that identical plan sold in the non-group market, for example.
  • Thus, leaving aside health benefits provided through self-funded private plans, federal, state or local employer groups or in the small group market, the remaining employer-based plans which are fully insured tend to be offered by medium-sized employers.
  • Total Workers.  Using methods described for self-funded ERISA plans, the small group, and state/local government employees, there’s an estimated 42.8 million workers in this market. Of these, nearly half (19.0 million) work for employers with 50-199 workers, while another 13.3 million work for firms with 200-999 employees.
  • Covered Workers. Just under half of these workers (19.3 million) obtain coverage through their own employer.
  • Covered Lives. Including dependents, a total of 39.0 million members are covered by insured employer plans outside the small group market.
  • Bureau of Labor Statistics. Employee Benefits in Medium and Large Private Establishments

Small Group Market

All states except Washington DC regulate the small group market, with all but a handful defining the upper end of this market at 50 employees (MO, ND and OR use 25, LA uses 35, and NH uses 100).

  • Total Workers. Average monthly employment in 2008 was 145.362 million (BLS: Table A-1). Using the national distribution of employment by firm size (Kaiser/HRET: Table M-1), there were 37.2 million workers in firms with 3-50 workers.
  • Covered Workers. Of these, 17.5 million were covered by their employer plan (author’s calculations using Kaiser/HRET: Exhibit 3.1). Excluding those in self-insured plans leaves 15.4 million workers (author’s calculations using Kaiser/HRET: Exhibit 10.1).
  • Covered Lives. Using the reported distribution of coverage by 1-person, 2-person and family among firms with 3-199 workers (Kaiser/HRET: Exhibit 3.10), total estimated lives covered in the small group market in 2008 (excluding those self-insured) is 30.7 million.


  • BLS. Employment and Earnings Report. January 2009; 56(1). [Full Text (pdf)]
  • DeNavas-Walt, Carmen, Bernadette D. Proctor, and Jessica C. Smith. U.S. Census Bureau, Current Population Reports, P60-236, Income, Poverty, and Health Insurance Coverage in the United States: 2008, U.S. Government Printing Office, Washington, DC, 2009.  [Full Text (pdf)]
  • Kaiser/HRET. Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2008. The Kaiser Family Foundation/Health Research & Educational Trust, September 24, 2008. [Full Text (pdf)]
  • Pierron, William and Paul Fronstin. ERISA Pre-emption: Implications for Health Reform and Coverage. Employee Benefit Research Institute, EBRI Issue Brief #314, February 2008. [Full Text (pdf)]
  • McDevitt, R., J. Gabel, R. Lore, J. Pickreign, H. Whitmore, and T. Brust, Group Insurance: A Better Deal for Most People Than Individual Plans. Health Affairs, Vol. 29, No. 1, January 2010, pp. 156–164.

3 Responses to “Group Coverage”


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