Health insurance is of utmost importance in that it helps people protect themselves, their families, and even their businesses from potentially disastrous illnesses. A popular way to ensure access to good healthcare is via a company’s group health insurance plan.
It’s a given that small business owners like to keep tight control over all expenses and strive to make sure that they stay well within budget constraints. So are the expenses of instituting a small business health insurance plan worth the trouble and expense for just a handful of employees?
The answer is an overwhelming yes! Group health insurance is one of the best ways to attract and retain qualified employees, while at the same time reducing risks to the company.
Wondering how? Here are 5 reasons why your establishment should enroll in a small business health insurance plan:
- It Might Be a Requirement
If your business employs 50 or more full time equivalent employees, then it is legally required that you provide affordable health insurance under the Affordable Care Act. If your business employs less than 50 full time equivalent employees, then you are not required to offer or pay for coverage. Most firms of this size still do offer and contribute towards group health insurance.
In this scenario, “Affordable” health coverage translates into the annual cost in respect of an individual employee being less than 9.86% of the respective annual income for 2019. Also, not offering coverage could subject you to a penalty of $2,320 per full-time employee (excluding the first 30 employees).
- Group Coverage Is Better
Group health insurance is what businesses purchase and offer to their eligible employees and their dependents. Such group coverage has several advantages over individual health plans.
Generally, group health coverage offers more extensive coverage and is also more affordable for employees. Provider networks are larger with group plans, and combining small businesses together allows for a larger buying pool, which helps lower premiums. Depending on your budget, the company can cover the entire premium itself, or split the premiums with employees. This also helps the employer balance costs vs benefits when attracting and retaining employees.
- Save on Taxes
One of the biggest benefits of small group health insurance is that the business can write off the health insurance premiums as tax deductions, resulting in even more savings. Small business owners gain a lot by way of deductions, with insurance premiums being one of the most common and popular tax deductions out there. Plus, premiums paid by the business are NOT included in the employee’s taxable wages.
- Employee Health and Productivity
In the absence of insurance, employees tend to focus on saving money at the cost of their wellness. This tendency can have a detrimental effect on your operations and ultimately the bottom line. It has been observed that employees without insurance benefits are less likely to go in for yearly checkups or consult the doctor when they fall sick. This ultimately impacts productivity when their conditions worsen and consequently increased time off from work.
When employees have access to quality small business health insurance, they tend not to be out sick as long or as often. Many plans include Telemedicine as a benefit, which allows employees and their families access to licensed doctors that they can access via the phone or by online chat. This helps the bottom line of the business as well as employees can access care on their phone and not have to take off from work to see a doctor.
- Employee Recruitment and Retention
Health insurance can be one of the biggest decision makers for people looking for jobs. Offering group health insurance goes a long way to show your appreciation for your existing and potential employees, and can be your leg up on the competition when it comes to hiring.
It’s also possible to structure your group health insurance plan so that your employees can pay their share of the premium with pre-tax money. This is called a Premium Only Plan and allows their contributions toward health insurance to be taken out pre tax. As the employer, you also do not pay payroll taxes on this amount as well.
We hope that the points listed above show how a quality group health insurance plan is a good choice for a small businesses. In a competitive labor market, offering a small group health insurance plan can be the best way for you to stand out from the competition. The goodwill goes a long way toward attracting and retaining employees, while the tax benefits help ease the cost of providing the coverage.
James Eckardt is the founder of Peak Advisors Inc., a boutique insurance brokerage on Long Island, NY. The firm has a stellar record of service with three decades of experience in health insurance coverage and hundreds of clients including small businesses, commercial enterprises, sole proprietor-ships and seniors.
