Small businesses with fewer than fifty full-time employees (FTEs) are not legally obligated to provide health insurance to staff members. But even if you’re not obligated to offer coverage, it may be in your company’s best interest to do so. From employee appreciation to significant tax breaks, the benefits of building an employer-sponsored health plan for your workers are many.
But those benefits don’t always come cheap, so you’ll want to do some research before you jump into the small-business health insurance marketplace. And we can help. Keep reading to learn more about the drawbacks and benefits of employer-sponsored health coverage.
Drawbacks of Small-Business Health Insurance
For most small businesses on a tighter budget, the expense is going to be the biggest downside of providing employee health benefits. In fact, rising health care costs were a concern amongst 75% of small-business owners in fall of 2016, according to a national Bank of America survey. Even though the US government has taken steps to rein in spending, health care costs in America are generally much higher than costs in other countries, meaning insurance coverage for your entire staff won’t be cheap.
The actual plan costs aren’t the only additional expenses, either—adding policies means adding extra responsibilities and paperwork too. As a result, you may need to bring on another staff member or a contractor with health care administration experience to spend time managing the policies for your team, especially when it comes time to renew. If you opt to add a wellness program into the mix, your hiring needs may grow even further.
Benefits of Small-Business Health Insurance
Despite the costs of health insurance coverage, there are substantial benefits that come with company-wide insurance offerings. Employer-sponsored health insurance is an attractive employee benefit—one that large companies have used to win new staff for decades. Providing your employees with competitive health care options will really help your business stand out among the others when vying for top talent. Health policies also make it easier to retain the staff you have since they will feel better cared for.
Health care coverage can also help keep your employees healthy. Further, if sick employees get prompt treatment, they’ll be less likely to spread contagious germs at work. All of that adds up to far less downtime in your office on the whole—a huge benefit for your bottom line.
There are also several tax benefits available to small businesses that provide employee insurance coverage. For instance, small businesses are potentially eligible for tax credits if they cover at least 50% of employee insurance premiums, employ fewer than twenty-five FTEs with average annual salaries below $50,000, and get coverage through the Small Business Health Options Program (SHOP) marketplace. The HealthCare.gov Tax Credit Estimator can help you get a better idea of the potential benefits you’d receive given your company’s specific circumstances.
Finding Health Care Coverage Success
If you plan to work insurance coverage into your budget for the coming year, keep in mind that tax benefits will help you offset your higher overheads after kicking off your employee health insurance program, but those breaks might not be immediate. Ensure you’ve carefully planned costs, and consult with your tax preparer to ensure you’re filling out all necessary forms and meeting required deadlines.
Additionally, whenever you decide to expand your employee insurance offerings, advertise this fact when recruiting new team members. Promote your benefits through social media and other marketing channels to give your business some free positive publicity—a great immediate return on your investment.
In the new year, many small-business owners will be looking to cut costs to support continued growth—but you won’t want to skimp when it comes to health benefits. If you can find other ways to save money in the new year, use that extra revenue to build out a reliable health coverage plan for your team.
