Small business owners often wonder if they should offer health insurance or not to employees. As they work on a small scale with comparatively fewer employees than large businesses, deciding to offer health benefits and insurance plans seems a big decision for companies.
Although there are several benefits that small businesses can offer, the one that rules them all is health insurance. Why? Because it keeps all the employees happy and healthy while ensuring them that they are being valued and taken care of. Considering this, many small business owners offer attractive insurance plans to employees even when they are not required by the Affordable Care Act (ACA) to provide coverage. They collaborate with reliable and expert employee benefits brokers to create the right packages for employees. In fact, one in four companies with fewer than 50-60 employees provide health insurance and approx 23% are planning to roll out the plan in the coming year.
However, many small entrepreneurs have doubts regarding these plans. They want to know the benefits of health insurance for employers and the tax advantages of group health insurance. How does offering small health insurance affect employee recruitment and retention? This may come as a surprise that health insurance in small companies is not only beneficial for employees but also offers a plethora of advantages to employers as well. It helps companies operate more strategically and efficiently.
So, are you on the fence yourself? Then here are the top reasons to offer employee insurance plans to the employees of small business:
It Is Easier Than You Think
One of the primary reasons that employers avoid group health insurance is that they think it’s too complicated to manage and demands great effort. However, the good news is that you don’t have to do it alone and manually. You can take help from a health insurance broker or advisor to guide you through the whole process. Using enterprise software development, you can implement a unified system to allow employees to select their benefits plans, enroll in them, and update their information. Your agent will help you and employees select the plan that is right for them based on the industry and preferences. They will also set everything up for you while ensuring compliance with government regulations and resolve all the queries of your employees.
Also, from a cost perspective, it is better to offer health insurance considering the reduced cost of group health plans. It has a lower average per-person cost compared to that of individual plans. Therefore, enrolling in a group health insurance plan would be more affordable to your small company and for employees as well.
Offers Benefits from Tax Incentives
Another financial benefit of small business health insurance is tax advantage and incentives enjoyed by both employees and employers.
When employees enroll in and buy health insurance, they have to pay using post-tax dollars. Thus, they make money, the government taxes that amount, and they take the remaining money for other expenses. However, in the case of health insurance through a group plan, they pay from pre-tax dollars. Hence, saving up to 30%-45% on their health insurance premiums.
- They can deduct 100% of the cost of monthly premiums on the amount they pay for qualifying group health plans from federal business taxes.
- Payroll taxes are reduced by almost 7.65& of employee contributions.
- Worker compensation premiums are reduced as well.
- Employers can deduct HSA contributions from small business taxes.
- Employees prefer benefits over salaries.
Makes Recruitment & Hiring Effective
In this highly competitive era, attracting and hiring top talent without offering health and additional benefits is challenging. Therefore, small companies are using health insurance as a crucial factor to create an effective hiring strategy that helps them stand out from other organizations. According to a recent survey, 66% of employers agreed that they offer medical benefits to hire and retain the best employees. This is clear that most candidates want health benefits and coverage, such as group health insurance. Thus, placing small employers who offer health insurance in a better position to recruit and hire top applicants who can add value to their business.
When you offer group health insurance while your competitors don’t, you get an edge over them and differentiate your business by demonstrating that you prioritize the well-being of your people and consider them a valuable asset. Make health insurance an integral part of your worker compensation and create robust and compelling benefits packages with lasting appeal to future hires and current employees.
Puts Health Coverage With Employees’ Reach
By offering small business group health insurance, employers allow access to health insurance for their employees, especially to those who cannot afford coverage on their own. A recent study shows that over 25% of small business owners offer health benefits as their employees cannot pay for such plans themselves. Rolling out a group health plan for small businesses helps employees enroll at reduced costs in programs that they may otherwise have access to on the individual market at a much higher cost.
Moreover, these health coverage plans also offer financial security to workers and make them and their family members feel secure at financial and professional levels. In fact, health insurance topped the list of employee benefits that contribute the most to financial security with almost 90% of employees agreeing that health coverage makes them feel more economically secure. It also makes the workforce feel less stressed and more confident in their ability to recover from catastrophic illness. Employee health plans make insurance affordable to a greater number of employees and provide them with peace of mind by offering sufficient medical coverage.
Boosts Employee Productivity
Group health insurance offers employees greater access to medical resources. Hence, they are assured that they can rely on insurance plans if they suffer from any catastrophic illness. It also reduces their sick days and absence, making them more productive and focused. Research done by MetLife found that 60% of employers witnessed higher productivity levels by offering group health insurance. Employees who prioritize preventive care get more accomplished at their work. They no longer have to worry about health insurance and coverage which otherwise used to drain their energy and time.
Small businesses also reap benefits, such as:
Reduced workplace absenteeism- as health insurance is directly associated with reduced time-offs and missed workdays.
Reduced labor costs- as unhealthy workers with no insurance coverage are likely to retire and quit early which leads to expensive employee turnover.
Increased productivity- offering health insurance positively impacts labor productivity.
Based on the industry you serve, it will be more cost-effective in the long run to provide employee health insurance rather than dealing with reduced productivity and lost time that often results from absence. Also, these plans add to a faster recovery period and return to work as employees have access to medical care easily.
Depending on your industry, it may be more cost-effective in the long run to pay for employees’
This is not an exhaustive list of reasons to offer small business health insurance to employees. There are many more, from fostering a happy work culture to saving significant money, and more. Group health insurance is equally beneficial for employees and employers. It shows your care and concern toward your people, thereby creating a culture of trust and dedication.
Author’s Bio: Scarlett works with the editorial team of Accomplish EP, a leading company offering HR software services to employers and employee benefits software. Exploring the latest technologies, reading about them, and writing her views have always been her passion. She seeks new opportunities to express her opinions, explore technological advancements, and document the details. You can always find her enjoying books or articles about varied topics or jotting down her ideas in a notebook.