Will My Company Get Tax Credits for Large Group Health Insurance?

Friday, February 16, 2024 17:08 Posted by Admin

Yes, it will. Generally, any expenses a company (read employer) pays for health insurance are fully tax-deductible as ordinary organizational expenses on both the state and federal levels. This includes premiums for large group health insurance policies, as well as administrative costs associated with running the plan.

Which Employers Can Claim These Tax Benefits?

Here’s a list of employers who may qualify for the tax deduction mentioned above:

  • Startups
  • Sole proprietor
  • Partnership firms
  • Private and public companies
  • Micro, small and medium businesses

Tax Implications for Employees

If the company bears the entire cost of the group health insurance premium, employees are generally not eligible for tax deductions. However, if employees contribute money to the group health insurance plan, they may be eligible for some tax benefits.

Also, suppose the employer bears the entire cost of the premium, and the employee buys a top-up plan to enhance the overall premium. In that case, the employee is entitled to claim tax deductions on the additional top-up plan they paid.

two employees talking

Benefits of Employer-Sponsored Group Health Insurance Plan

Here are some of the benefits employers can leverage by fully sponsoring their Group Health Insurance plan:

  • Attract and Retain Talent: With the average cost of hiring a new employee standing at $4000, paying for a group health insurance premium may seem to be an expensive proposition. However, you should look at the bigger picture here. Employers who offer health insurance plans are more likely to attract and retain talent, as employees see it as a valuable benefit.
  • Boost Employee Morale: A healthy workforce is a productive one. Therefore, offering group health insurance helps boost the morale of your employees, which in turn leads to better productivity.
  • Comply with Obamacare: Under the Affordable Care Act (ACA), all employers with more than 50 employees must offer health insurance coverage to their full-time workers. By fully sponsoring your group health insurance plan, you are complying with the law.
  • Tax Deductions: All expenses that an employer pays towards their group health insurance plan are tax-deductible. This includes premiums paid for the health insurance policy, as well as administrative costs associated with running the plan.
  • Attract New Customers: In today’s age, it’s not enough for businesses to compete based on price and quality. Many customers are also looking for organizations that share the same values. One of those values happens to be health and well-being. Offering group health insurance helps send the message that your company cares about the well-being of its employees, which can attract new customers.
  • Avoid Lawsuits: Believe it or not, offering group health insurance can actually help reduce the number of lawsuits a company faces. Employees are less likely to sue their employer if they are happy and healthy, as they have nothing to lose.
  • Protect Your Reputation, Brand Image: A company that has a bad reputation is unlikely to attract or retain employees. For example, if you don’t offer group health insurance, your employees may talk about it with their friends and family, negatively affecting your organization’s reputation.
  • Get Better Rates on Health Insurance: When you buy a group health insurance plan, your employees will be grouped under the same policy. Due to this, they all pay the same rate regardless of their medical history or age. This can help reduce premium costs for both employers and employees, especially if any of your employees have pre-existing conditions that might make them ineligible for individual plans.
  • Increase Employee Loyalty: As mentioned earlier, offering group health insurance helps keep your employees healthy and motivated. This can lead to increased loyalty.
  • Provide Competitive Advantage: In an increasingly competitive job market, businesses need to find ways to stand out from the pack. Offering group health insurance can help businesses do just that, as it is not commonly offered by other employers.

Taylor Benefits Insurance Is Here For You!

If you are an employer looking for affordable group health insurance, our brokerage firm can help. Contact Taylor Benefits Insurance today to learn more about our services.

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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