The Benefits of Providing Benefits – Why Should You Offer Group Health Insurance?
Until January 1, 2019, many large employers had been facing penalties under the Affordable Care Act for failing to provide insurance coverage to their employees, while individuals who had not purchased an insurance plan faced a similar tax penalty. Thanks to the elimination of this mandate, companies will no longer be held accountable by the law for not providing coverage to your employees. While this rule never applied to small businesses, all employers (both large and small) must choose between spending a few more dollars on company-sponsored health coverage for their employees, or dropping the coverage and missing out on huge employee retention and attraction tool.
Although providing coverage seems like just another item to add to your long list of expenses, you must remember that workers have a lot of job opportunities and options nowadays. A study by Wellthie found that in the 5 largest NY counties, employees pay as much as 233% more on individual health plans than they would on employer-sponsored plans. To stand out and attract the cream of the crop, it pays to offer benefits – literally. The most sought-after benefit of today’s workforce is health insurance. This makes sense because the hunt for good coverage is long, expensive and arduous, especially for foreign nationals working in the USA. Since many small employers forgo benefit packages, you would gain the upper-hand by offering health benefits and receiving numerous tax advantages in return. So without further ado, here are the top 5 reasons why you should offer insurance coverage to your employees:
- It’s a valuable recruiting/retention/employee satisfaction tool
According to this Glassdoor survey, the number one cause for employee satisfaction is employer-sponsored health insurance coverage. If it’s a top priority with your employees, make it your top priority as well and you’ll be rewarded with a much better, happier, and motivated workforce. With all the big boys offering tons of benefits and “perks”, it’s no longer enough to be a remarkable, quirky, tech-savvy start-up or small business – it’s equally vital that you offer a competitive benefits package including attractive health and life insurance coverage options in order to draw in and retain the top-drawer talent. To your small business, this is definitely a big expense. But it’s one that goes an even longer way.
- You avoid paying higher salaries
To compensate for fewer or no benefits, most employers choose to hike employee compensation. However, women and youth in today’s workforce are actively seeking better health benefits as opposed to higher pay or raises because of the long-term advantages. While it may seem otherwise, this is beneficial to you (especially if you offer voluntary benefits) because it reduces your payroll costs while offering decent coverage to your satisfied employees. Group insurance coverage is generally much, much, more inexpensive than individual policies, giving you more legroom to handle other expenses. In other words, it’s a win-win for you and your staff.
- You receive huge tax deductions
Employer contributions are 100% tax-deductible. Plus, your payroll taxes take a plunge because health insurance premiums paid by your employees are not counted towards your total income. It doesn’t stop there: your group-insurance premiums are tax-exempt and your workers’ compensation premiums decrease. Furthermore, your employees will receive tax benefits too – through group coverage, they can use pre-tax dollars to pay for their insurance premiums as opposed to using after-tax dollars for individual policies, saving them 30% to 45% on their insurance. In other words, their taxable income will reduce which means: less taxes and more savings for everyone.
- Group insurance gives you access to a wider network of doctors and hospitals
Here’s an often-overlooked pro – through group insurance, both you and your staff can gain access to a better, larger spread of healthcare services and providers which would be relatively limited through individual plans. Since the risk is distributed over a bigger crowd, you will receive a more comprehensive, unique package at a much lower rate than would be possible through individual policies. Plus, group insurance covers preexisting conditions – a common exclusion under individual plans.
- Better benefits lead to better work ethic and more productivityThis annual survey conducted by MetLife found that one of the primary financial concerns of employees today is whether they will be able to afford a good healthcare plan. When you provide health insurance to your employees, you lift the burden of finding decent coverage off of their shoulders, giving them more breathing space to work productively for your business. If you take the extra step to inform your employees of the amount of insurance you pay for them and the extent of its coverage, they will understand the cost at which you are hiring them and perform better. Investing in the holistic support your staff assures them of your concern for them, which is a positive motivation for them to thrive in the workplace. Also, the healthier your employees are, the fewer sick days they’ll take – a.k.a. automatic productivity-booster.
Of course, as a small business, you must use your money prudently – dishing out thousands of dollars on benefits without receiving anything in return isn’t what you’d call…beneficial. Also, If you decide to offer coverage, there are some rules and regulations that you could potentially violate. This is where NY Small Health can help out and make sure you provide compliant, cost-effective, and rewarding benefit plans to your deserving workers. At the end of the day, you will be rewarded with a productive, happy and healthy team of workers who will perform better knowing you care about their well-being.
Want to know more? Talk to an expert about how you can serve your employees better so that they can return the favor.