U.S. Employer‑Sponsored Benefits Face Coverage Gaps and Cost Misperceptions

Employer‑provided health insurance (ESI) now covers about 49% of American workers. Experts note that the tax exemption for ESI premiums lowers employee taxes but also restricts plan choice, ties coverage to employment, and may suppress competition in the group market. The system, rooted in World War II tax policy, has expanded access yet created incentives that can penalize workers who lose their jobs.

A separate study finds that many small U.S. businesses do not offer retirement plans, leaving millions of workers without retirement savings. Surveys of accountants, lawyers and other professional service providers reveal widespread overestimates of the cost and administrative burden of retirement plans. Providers who actively guide clients and promote pooled or multiple‑employer plans see higher adoption rates, while emphasis on SEP IRAs correlates with lower coverage. Improving provider knowledge and framing benefits as recruitment tools could narrow the retirement‑plan coverage gap.