For many small business owners, the question is often, “Should I offer health insurance for my employees?”
It’s usually a financial question and not one of desire or willingness.
In fact, the law does not actually require small businesses to offer or provide health insurance coverage under the Affordable Care Act (ACA). In fact, no business is forced to pay for health insurance in the United States. However, large businesses that do not comply with the insurance coverage stipulations provided in the ACA do have to pay a no-coverage penalty to the IRS on their tax filing.
According to the insurance requirements of the ACA, those businesses with less than 50 full-time employees are considered to be “small businesses” and are exempt from the no-coverage penalty. But if they chose to purchase health insurance, these small employers are guaranteed group coverage, regardless of the employees’ health status.
And, because a “small employer” is defined as one with 2 to 50 full-time employees, with owners generally counted as employees, this means that sole proprietorships with one employee usually fall into this category, as do partnerships without any employees.
Whether your business has more than 50 workers, or is just you and your receptionist, there are many benefits to offering health insurance.
With Health Insurance Coverage Everyone Wins
The truth is that offering health insurance coverage to workers benefits both employees and the employer.
Employer-sponsored health insurance has become an essential component of an employer’s benefits package and the most important benefit in the minds of most employees. Regardless of the job market, attracting top talent requires an attractive benefits package offering.
And this means that employer health insurance offering is a deciding factor for desirable candidates.
Why is this? One reason is the essential need for health insurance. In fact, one survey reported that nearly 60 percent of all working Americans acquire their health insurance coverage through employer-sponsored plans.
So, what are the other benefits of offering health insurance to your employees?
Reduced Health Insurance Costs
By offering employee health insurance, most small businesses can obtain better rates for health insurance than those available for individuals. And this means lower health insurance costs for everyone, including employers. Also, ensuring that employees have access to quality healthcare through comprehensive coverage helps maintain a healthy workforce, which leads to lower sick days and related costs in the long term.
Improved Employee Morale and Workforce Productivity
One of the benefits of healthy employees is more productivity. A recent survey found that 56 percent of U.S. adults with employer-sponsored health benefits said that whether or not they like their health coverage is a key factor in deciding to stay at their current job.
And the CDC has found that employees with comprehensive health coverage can prioritize preventive care, which leads to being more productive at work. In addition, by providing the means for supporting a healthy workforce, employers can actually increase overall productivity. And all of this can lead to increased employee morale.
Potentially Lower Payroll Costs
When negotiating salary offerings, many prospective candidates are inclined to consider a position at a somewhat lower salary if affordable and comprehensive health insurance benefits are offered. When the out-of-pocket costs for individual health insurance premiums and deductibles are factored in, smart prospects understand the financial benefit of employee-sponsored group health insurance benefits.
Federal Tax Deductions
Small business employers can deduct many of their health insurance-related expenses from their federal business taxes. For example, businesses can generally deduct 100 percent of the premiums paid for qualifying group health plans.
According to HealthCoverageGuide.org, “The small business healthcare tax credits have been available since the 2010 tax year. To qualify for a tax credit of up to 50% of premium expenses for any two years, small business owners must pay at least half of employees’ healthcare premiums and have 25 or fewer full-time equivalent employees who earn an average of $50,000 or less per year.”
In addition to these great benefits, the overall quality and longevity of a company’s workforce can be significantly bolstered when quality, affordable health insurance coverage is made available.
For example, by offering group health insurance, small businesses are far more likely to keep their top employees for the long term, according to numerous studies. And having satisfied employees who are content with their jobs and health benefits can make for happier employers. This then leads to greater employee engagement, which is a significant factor in creating and fostering a robust and resilient company culture.
We Can Help With Your Health Insurance Decisions
As a small business owner, you understand the wisdom and value in recruiting the services of industry experts. It’s no different when it comes to small business health insurance.
As a family-owned and operated California health insurance agent licensed to do business in California, we specialize in medical insurance plans for small businesses, as well as for individuals and families, and people with Medicare.
At J.C. Lewis Insurance Services, we can tailor our recommendations to your particular needs since we are licensed with most major carriers in California. You save time and money, and we can quickly define your particular needs and recommend the best products and prices to meet those needs.