The Decline in Participation of Hourly Full-Time Employees in Employer-Sponsored Health Insurance
Shane’s video blog introduction
In recent years, the landscape of employer-sponsored health insurance has undergone significant changes, particularly affecting hourly full-time employees. This article explores the decline in participation rates among this demographic, examining contributing factors and potential implications for both employees and employers.
Overview of Employer-Sponsored Health Insurance
Employer-sponsored health insurance has been a cornerstone of the U.S. healthcare system, providing coverage to millions of workers and their families. According to the Kaiser Family Foundation (KFF), approximately 60% of people under age 65, about 165.6 million people, receive health insurance through their employer, making it a critical component of healthcare access in the country.
Trends in Participation Rates
Despite the importance of employer-sponsored insurance, participation rates among hourly full-time employees have shown a concerning decline. The KFF’s 2025 Employer Health Benefits Survey indicated that while overall employer-sponsored insurance coverage has remained relatively stable, participation among lower-wage workers, particularly hourly employees, has dropped.
Key Statistics
Declining Coverage: The share of firms offering health benefits fell from 83% in 2010 to 61% in 2025, the lowest level KFF has recorded. Among small firms (10-199 workers), the drop is steeper: 82% in 2010 to 59% in 2025 (KFF, 2025).
Participation Rate: At firms with many lower-wage workers, only 65% of eligible workers enroll in the plan they are offered, compared to 80% at firms with many higher-wage workers (KFF, 2025).
The Coverage Gap: Just 43% of workers at firms with many lower-wage workers are actually covered by their employer’s plan, versus 64% at firms with few lower-wage workers (KFF, 2025).
Eligibility Barrier: Only 67% of workers at firms with many lower-wage workers are even eligible for the coverage their employer offers, compared to 83% at firms with few lower-wage workers (KFF, 2025).
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Contributing Factors to Decline
Several factors contribute to the decline in participation among hourly full-time employees:
- Cost of Premiums: The average annual premium for employer-sponsored family coverage reached $26,993 in 2025, up 6% in a single year and 26% over five years, with workers contributing an average of $6,850. At firms with many lower-wage workers, the worker share climbs to $7,995 a year, or 31% of the total premium, compared to 26% elsewhere (KFF, 2025).
- Increased Part-Time Employment: The gig economy and a trend toward part-time work have reduced the number of employees eligible for employer-sponsored plans. Many employers only offer health benefits to full-time employees, leaving part-time workers without coverage options. Only 18% of small firms and 27% of large firms that offer health benefits extend coverage to part-time workers in 2025, showing that access to employer-sponsored coverage remains limited for part-time employees.
- Wage Stagnation: Stagnant wages among hourly workers make it increasingly difficult for employees to afford health insurance premiums, leading to lower participation rates. The Economic Policy Institute reports that wages for low-wage workers have not kept pace with inflation, further exacerbating the issue.
- Employer Mandates and Compliance: The Affordable Care Act (ACA) requires larger employers to offer health insurance to full-time employees, but many smaller employers are exempt from these mandates, which can lead to disparities in coverage.
Implications of Declining Participation
Several factors contribute to the decline in participation among hourly full-time employees:
- Access to Healthcare: With fewer employees participating in employer-sponsored plans, there may be increased reliance on public health programs such as Medicaid, straining resources and potentially leading to gaps in coverage.
- Health Outcomes: Lack of insurance can result in delayed medical care, leading to worse health outcomes for employees and increased long-term costs for both individuals and the healthcare system.
- Employee Retention: Employers may face challenges in attracting and retaining talent if they do not offer competitive health benefits, particularly as workers increasingly prioritize health coverage when evaluating job opportunities.
Conclusion
The decline in participation of hourly full-time employees in employer-sponsored health insurance is a multifaceted issue influenced by rising costs, changing employment patterns, and stagnant wages. Addressing these challenges will require collaborative efforts from policymakers, employers, and the healthcare system to ensure that all workers have access to affordable and comprehensive health coverage.
References
- Kaiser Family Foundation. (2025). Employer Health Benefits Survey. Retrieved from KFF Website
- Economic Policy Institute. (2025). Wage Stagnation in Nine Charts. Retrieved from EPI Website
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