Why Businesses Should Offer Group Health Plans and Other Employee Benefits

Wednesday, April 10, 2024 11:12 Posted by Admin

The majority (83% or more) of employers with 100 or more employees offer medical benefits. The number drops for smaller employers, simply because it becomes much more difficult to keep up with costs at a smaller scale, but the point is that employer benefits are the norm.

Employee benefit plans include standard-issue benefits like group health insurance, retirement plans, and affordable life insurance. And there is a growing trend to increase benefits to include additional wellness services, flexible working arrangements, unlimited paid time off, tuition or student loan assistance, bonuses, and more.

If you’re weighing your options, you may be wondering why some companies choose to forego the employee benefits while others opt to bulk them up. Here are a few compelling reasons why businesses should offer group health plans and other benefits.

It’s the Law—The Affordable Care Act Mandates Most Employers to Provide Group Health Insurance

Passed in 2010, the Affordable Care Act (ACA) is healthcare reform that aims to increase the affordability and availability of health insurance, expand coverage, and support innovation in healthcare that will ultimately help lower group health insurance costs.

What it means for employers:

  • Employers are required to provide notice to their employees regarding their options for health insurance coverage.
  • Employers with 51 or more employees are required to provide group health insurance.
  • Large employers are subject to fines averaging $2K per employee for non-participation to offset the tax credit given to these employees for purchasing plans through the marketplace.
  • Employers who offer unaffordable or insufficient coverage are subject to fines averaging $3K for any employee who receives a tax credit on top of the $2K per employee fine.
  • Employers are required to report coverage and some may be required to automatically enroll employees.

The Skills Gap is Real and Great Benefits Attract the Right Talent

According to research by McKinsey & Company, upwards of 87% of global employers are facing a skills gap—now or in the very near future. What this means is that there aren’t enough workers with the right skills to fill the jobs that are available. The workforce is evolving and the most in-demand skills aren’t lining up with the degrees graduates are holding. Technology skills are the most obvious, but many employers are struggling to find candidates with the level of communication and collaboration skills that they need as well.

For candidates that have the right skills, competition to attract them and retain them is fierce among employers. As the skills gap continues to grow, this competition will grow as well. There are a number of things that employers can do to make their job offers more appealing. Offering the right benefits with a better lineup than their competition is a surefire way to sway someone’s opinion.

Healthier, Happier Employees Work Harder

There’s a strong link between employee engagement and your benefits. Engagement is a measure of how intrinsically motivated an employee is to do their job. Employees who feel valued by their companies tend to work harder. A great benefits lineup is one way to demonstrate that the company cares about its employees.

On top of that, healthy employees—those who are able to receive the care they need, miss less work. With lower absenteeism rates, productivity goes up. Offering group health insurance and a range of other benefits makes a big difference on your bottom line. For every $1 spent on workplace wellness, employers save $2.73 in lost productivity and other costs related to absenteeism.

There are Tax Advantages, Especially for Smaller Businesses

For starters, businesses with fewer than 25 full-time employees may be eligible to take advantage of a special tax credit when offering group health insurance under the ACA. Additionally, for all employers, section 125 deductions like pre-tax payroll benefits not only lower employees taxable income, but businesses payroll tax burden as well.

Other common benefits that could work in your favor when it comes time to file taxes include:

  • Paid Employee Leave
  • Retirement Plan Contributions
  • Office Renovations
  • Tuition Reimbursement Programs
  • Continuing Education & Professional Development Expenses
  • Achievement Awards for Length of Service

Final Thoughts on Offering Group Health Insurance and Other Benefits

It seems like employee benefits are more than the norm. They are a win-win-win for employers and employees alike. Forking over 50-70% of the cost of healthcare premiums might not look like a win at face value. But if you consider it an investment into creating a healthy and happy workplace full of engaged and loyal employees, we promise—it’s a win.

You get higher productivity, reduced absenteeism, and better retention while employees get access to the healthcare they need. Employers of all sizes should really consider offering a full benefits package in order to be competitive and retain their great talent. For the workforce, benefits are a necessary part of the compensation package. Skipping on the benefits often communicates one thing—a lack of care about the people who work for you. As the future of work relies on embracing skilled human talent, that’s a difficult position for any business to be in.

Written by Todd Taylor

Todd Taylor

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.

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