Being a business owner is a dream many people share but few fulfill. However, once you become a business owner and reality sets in, you realize it might be harder than you thought.
Leading a company and being responsible for the wellbeing of your employees is tough. Every decision you make should be well-informed and to everyone’s benefit.
One of these tough decisions is whether to offer health insurance to your employees. In some cases, it could be mandatory. But if it’s not, you can’t decide without knowing the key benefits of health insurance for employees.
There’s not one benefit to offering better healthcare plans to your employees that outdoes the rest. The following paragraphs will explain how much good can come from being a more caring employer.
Due to the cost of healthcare in the U.S., many employees don’t go out of their way to get yearly physicals. Some might not even be taking the medication they’re supposed to because they can’t afford it.
This means that employees who aren’t well won’t be as productive as they could be. One of the advantages of employee based health insurance is preventative care.
Your employees will take care of themselves when they can afford to do it. If they need sick days, they won’t max out their leave. If they need stronger medication, they’ll be able to get it and follow better treatments.
Some policies even include compensation for various wellness programs that enable employees to adopt healthier lifestyles.
The healthier you keep your employees, the less downtime you’ll incur. If they’re rested and cared for, their productivity shouldn’t suffer. When your employees are at 100% and your company performs better, this affects the bottom line in a positive way.
Every company benefits from a high employee retention rate. Continuity in a company helps people improve at their jobs, understand operational procedures, and fit into the culture.
Hiring new people out of necessity isn’t fun or cheap. Recruitment campaigns can get expensive, and training new employees can slow down a company’s workflow and interrupt processes while people get up to speed.
So, how do you keep your employees long-term? Good healthcare coverage.
One of the benefits of employer provided health insurance is superior employee retention. If you think about it, many employees today make a big deal about benefits. Salaries are important too, but everyone’s aware that wage increases get taxed.
Therefore, any additional benefits you can provide can be great incentives for employees to remain loyal. Health insurance happens to be one of those benefits.
It doesn’t matter if you’re offering a defined contribution allowance or a traditional benefit health plan. Any contribution you make that helps employees get better healthcare coverage will be appreciated.
If you’re looking for new blood and you’re unwilling to settle, attracting high-level candidates is crucial.
Employee insurance benefits your recruitment strategy along with your retention strategy. Again, this is a matter of listening to what the market demands.
Qualified people want good salaries and benefits. Benefits are almost mandatory to attract the right employee. Sponsored insurance is one of the best incentives you can offer during a recruitment campaign.
Of course, the incentive only works if the insurance coverage is advantageous for the candidate, preferably an upgrade from their previous plan.
Not all employee benefits are tax-deductible or tax-free. Sometimes it costs a lot to reward your employees and keep them loyal.
But tax breaks are among the top benefits of health insurance for employees. An insurance policy can increase an employee’s compensation package without increasing their tax rate.
Unlike other benefits, the health insurance contribution is tax-deductible. Employers only end up paying part of the amount the employee actually benefits from.
Furthermore, being self-employed allows you to deduct the entire cost of your health insurance premiums. The same applies to incorporated businesses, which can treat employee insurance as a 100% deductible business expense.
One of the most underestimated benefits of employer-based health insurance is flexibility.
As an employer, you have many options regarding structuring employee insurance benefits and plans. For example, you can offer what’s known as defined contribution programs. This allows you to set a fixed monthly allowance for each employee and give them the freedom to choose whatever insurance they desire.
Another option would be offering group health insurance. This is a great way for employees to save money because you could commit to paying a portion of the premiums.
The more employees you enroll in this type of program, the lower the premiums.
Even better, you can give employees group health insurance without splitting the cost of premiums with them. Some small businesses do this when they don’t have the financial power to make contributions.
But from an employee’s standpoint, this can still be a tremendous benefit and incentive to stay loyal. Employees in group programs can qualify for better marketplace rates. Thus, they can still get cheaper coverage than they could on their own.
The bottom line is that flexibility is a key benefit of insurance. You can surely find the best healthcare coverage strategy to fit your company’s profile, financial state, and employee demands.
Tax credits are also among the benefits of health insurance for employees. The Affordable Care Act (ACA) created a tax credit for small business owners that want to offer group insurance coverage.
While qualifying for the credit isn’t exactly easy, you can benefit from it for two consecutive years.
A company that may be struggling financially can use insurance tax credits to offer employees and candidates more healthcare benefits, keep them happy, and help sustain the company’s growth.
Although any insurance benefits eventually incur some costs you might not have planned for when you started the company, offering coverage can sometimes be a lifeline for a business that isn’t doing well.
By now, it might not surprise you that most businesses offer healthcare benefits to retain their best workers and hire the best available talent. However, other organizations do it out of a sense of moral obligation. In these situations, the benefits of employer-sponsored health insurance can seem vague.
But think about how much workers care about the contribution and benefits packages. Perks mean a lot to them, sometimes more than salary, and influence their decisions and affect morale and productivity. Not all benefits of health insurance for employees are easily quantifiable.
Everyone knows the struggles with getting good healthcare coverage in the U.S., including your customers and clients. Being known as a company that provides high-quality health insurance is an excellent marketing move.
Just like it helps attract star candidates, it can help attract more clients and customers.
Your company will be labeled with good morals and as an organization that does right by its employees. This can improve your brand reputation and build trust with consumers, partners, and stakeholders.
According to a Glassdoor survey from 2016, three types of benefits contributed to the highest employee satisfaction.
Health insurance occupied the top spot in 2016, and it’s unlikely that these preferences have changed. Given the COVID-19 pandemic, tough economic times, and the ever-increasing cost of healthcare, health insurance and benefits remain among the biggest concerns.
Keeping employees satisfied is easily one of the top advantages of employer based health insurance.
Interestingly enough, offering health insurance may actually reduce your company’s labor costs.
As previously mentioned, access to insurance helps keep people healthy, or at least gets them back on their feet faster. This directly impacts productivity and morale.
But there’s another easily-missed benefit that comes from this.
Healthy employees are unlikely to quit or retire early. This should result in a better employee retention rate.
The alternative to this can be more costly than you think. New employees need to be trained and nurtured into your company’s culture. They may have to learn completely new procedures, adjust to job responsibilities, etc.
The employer often supports training costs, which is why too much training can negatively impact your cash flow or cash reserves. Additionally, this leads to getting diminishing returns on investment from workers, as more of them need time and training to produce at a high level.
On the other hand, healthy employees stay with you longer. They don’t need to be retrained or reskilled and give you more value in return.
Many organizations can offer good salaries and decent benefits while still being labeled as toxic workplace environments. That’s because some business owners don’t know how to show their employees they care, or because they don’t foster the right type of company culture.
One of the most significant benefits of health insurance for employees is the message you send about the company culture.
A group health plan or defined contribution program tells employees you care about their health. It says that you value their wellbeing and see them as assets.
Employees know that any benefit an organization offers is an out-of-pocket expense. Therefore, the effort will be appreciated.
Along with instituting strong company values, health insurance options create a healthier and more positive company culture. And many studies link productivity increases with positive workplace environments. It shouldn’t be hard to understand, as positive emotions make it difficult to lose morale and patience or develop a desire to stick it to the man upstairs.
The general rule of thumb is—take care of your employees, and they’ll take care of your company.
Not every employee has enough money saved to pay for medical expenses out of pocket. Even fewer probably have the funds to pay monthly premiums on individual health insurance plans. The reality is that access to affordable healthcare is one of the top employer-sponsored health insurance benefits.
Due to the extremely high costs of the U.S. healthcare system, many people can’t wait to land a job that provides health insurance and healthcare benefits.
Even though these plans often split the cost of premiums between the employee and the employer, it still puts them in a better position than having to pay for everything themselves. Not all insurance providers have affordable policies or plans with sufficient coverage for one’s particular needs.
The cost of providing healthcare to employees can always be viewed as a disadvantage. Sure, tax breaks and deductions are among the top benefits of health insurance for employees. Nevertheless, health insurance isn’t a mandatory expense for all companies.
Committing to cost-sharing can be problematic at times, especially if your company starts to struggle and you can’t access grants or healthcare tax credits.
There’s also the matter of liability. While there have been few cases of employers getting sued by employees for choosing a bad provider, it’s always a possibility. If you fail to do your due diligence and the employees end up with an insurance provider that scams them or commits malpractice, you could be found liable.
This can add more stress to an already difficult choice to make. But the remote likelihood of this happening and the abundance of resources available to help you choose the best provider easily offset this downside.
Just because you want to help your workers or need to hire better people fast doesn’t mean you should rush this decision. It takes time to work out something that’s both in your company’s best interest and improves your employees’ lives. That’s why most business owners work with specialized brokers.
Offering health insurance is a long-term financial commitment. It’s also an administrative undertaking in some cases, and can often help define your company culture.
Be sure you’re sending the right message and meeting employees’ needs before choosing a provider and a plan.
If you want to maximize the benefits of health insurance for employees, don’t hesitate to reach out. Our combined brokerage experience of over 25 years can help you create the ideal benefits package and identify the best providers.
Todd Taylor, oversees most of the marketing and client administration for the agency with help of an incredible team.
Todd is a seasoned benefits insurance broker with over 35 years of industry experience. As the Founder and CEO of Taylor Benefits Insurance Agency, Inc., He provides strategic consultations and high-quality support to ensure his clients’ competitive position in the market.
We’re ready to help! Call today: 800-903-6066