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Playing the Health Insurance Card. 6 reasons why small business should offer employee coverage.
Navigating employee health insurance is one of the most challenging and stressful aspects of running a small business. Your workers’ health is important, but increases in healthcare costs weigh heavily on the financial health of your business. Keeping up with countless rules and reviewing hundreds of health insurance coverage options can leave you wondering if you should even offer health coverage at all.
There is a widening gap between health insurance coverage and small business. According to the Bureau of Labor Statistics, 88% of employers with more than 500 employees offer health insurance, but only 55% of employers with fewer than 100 employees offer it.
We understand the hesitation. When you own a small business, it’s critical to be mindful of expenses and stay within budget. With that in mind, it’s entirely reasonable to question if small business health insurance is really necessary if you’ve got just a few employees. The answer is overwhelmingly yes! Small business health insurance is one of those perks that retains your competitive advantage.
Here are the top 6 reasons why you should get small business health insurance:
1. It’s the Law
If you employ 50 or more full-time employees, then you are legally required to provide affordable health insurance under the Affordable Care Act. “Affordable” health coverage means employee’s annual cost can be no higher than 9.86% of their annual income in 2019 (9.56% in 2018). Not offering health insurance coverage subjects you to a penalty of $2,320 per full time employee, excluding the first 30 employees.
2. Group Coverage Is Better
An individual health plan offers coverage just for yourself or for your family. Small business group health insurance has specific advantages over an individual health plan. Group coverage is insurance that businesses purchase and offer to eligible employees and their dependents. During your review, an insurance company will gather basic demographic information about the group members-like age, geography, etc, before explaining your plan options. Usually group health coverage is more affordable for employees and provides more extensive coverage. You can decide whether to split the premiums with your employees or cover the entire premium, depending on your budget.
3. Tax Credits
Purchasing small business health insurance for yourself and your employees can help you quality for tax credits. To quality, you must purchase a plan through the Small Business Health Options Program (SHOP) Exchange, which is an insurance portal created by the Affordable Care Act.
You can qualify if you meet the following requirements:- Have fewer than 25 full-time employees, or the equivalent based on working hours
- Offer health insurance to all of your full-time employees
- Pay salaries of less than $50,000 per full-time employee, on average, each year
- Front at least 50% of the premium cost of the small business health insurance
4. More Tax Benefits
Beyond the SHOP tax credit, you’ll also be able to write off the health insurance premiums you pay as tax deductions, saving even more money. Small business owners can save a pile of money by deducting expenses, and health insurance premiums are one of the most common small business tax deductions out there. Plus, with a tiny bit of extra paperwork, you can set up your small business health insurance so that your employees can pay their portions of the premium with pre-tax money. They save cash, which makes them happier and more satisfied with their jobs. It's a win win!
5. Improve Job Satisfaction and Recruiting
Health insurance is a big deal for people on the hunt for a new job. Offering small business health insurance, even though you're not a big corporation, shows how much you value your employees. To be sure you're attracting the best and brightest talent for your small business, consider investing in health insurance. Studies show that small business health insurance plans increase employee loyalty and decrease turnover. In a Harris poll, 86% of workers said that receiving comprehensive medical benefits would influence them to choose one job over another that didn't.
6. Healthy Employees Are Productive Employees
Employees without small business health insurance are less likely to get yearly checkups or visit the doctor when sick. This ultimately leads to a decrease in productivity when they get even sicker and have to take more time off from work. By focusing on saving money to the detriment of their health, these employees are hurting your bottom line.
You're among great insurance companies! Access a list of our member insurance agencies by clicking here. Make sure to tell them the Chamber sent you!
Interested in writing a guest article for the Chamber? Email sheri@shorelinechamberct.com.