Though small businesses with fewer than 50 full-time employees are not legally required to provide health insurance to their employees, about 30 percent of them still do, according to Kaiser Family Foundation. Those small business owners know that offering employees health coverage is one of the best ways to keep everyone happy and healthy, which is good for business.
Here are four compelling reasons to add health insurance to your benefits package, even when the law doesn’t require it:
Surveys by Glassdoor and Robert Half, a leading staffing firm, found that employees cite health insurance as the benefit they most want from their employers. It even outranks pay, meaning most employees would choose lower-paying jobs with better benefits if they had to make a choice. So, health insurance is an important recruitment and retention tool, especially now, when unemployment rates are at historic lows.
Employers who are unsure what benefits to offer should prioritize health coverage, which improves job satisfaction.
The healthier your workforce, the more productive it is. In a 2018 MetLife study, 60 percent of employers reported that offering health insurance led to higher employee productivity levels.
It makes sense. When employees have access to affordable health care, they are more likely to get annual checkups and seek additional care when they need it. Regular doctor visits help your staff stay well and manage any preventable chronic health conditions that could increase absenteeism or hamper their ability to effectively perform their job responsibilities.
Premiums you pay for group health insurance benefits usually are tax deductible, so those costs are excluded from your business tax calculations. This tax incentive can significantly lower or even eliminate your tax payments.
Furthermore, you sometimes can write off health insurance plan costs by deducting them as business expenses. Here are a few common health insurance-related deductions:
- The portion of your employees’ premiums that you pay – so long as it’s at least half – are considered a business expense you can write off.
- Employer contributions are a tax benefit to employees, too. Because the government does not define those dollars as wages, they are not subject to taxes levied for Medicare, Social Security, federal income and more.
- If you purchase a plan through SHOP, the Affordable Care Act’s Small Business Health Options Program portal, you may qualify for a tax credit that covers up to 50 percent of the health insurance premiums you pay if you:
- Have fewer than 25 full-time employees earning an average annual salary of $53,000 or less.
- Offer a group health insurance policy and pay at least half of employee premium costs.
Managing a health insurance plan can be tedious, complex and overwhelming, which is why many small business owners rely on an outside partner to handle it. Experienced managers of large group health insurance plans – like professional employer organizations (PEOs) – can save you time, money and the stress from administrative burdens caused by health benefits.
A trusted PEO can:
- Help you select a plan that meets your employees’ and company’s needs;
- Give you access to better health plans than you could secure as a small business, because PEOs “pool” clients’ employees into a single group and negotiate rates on behalf of that large employee group;
- Set up the plan and handle renewals, open enrollment, employee education, onboarding and employee claims;
- Handle related compliance issues so you don’t run afoul of the law and incur related penalties;
- Answer complex employee health insurance questions so you don’t have to.
Offering health insurance is not just the right thing to do from an ethical perspective. It’s also a good idea for business reasons. It helps create a team that experiences higher morale and better health, which translates to reduced absenteeism and greater productivity.
Besides the bottom-line benefits these advantages bring, providing health coverage also could save you money in lower taxes, salaries and turnover – and give you plenty of reasons to prioritize health insurance when you’re building your employee benefits packages.