If you’ve been in business for more than a year or so you probably already know that what the Affordable Care Act (ACA) classifies as a “small” business are those with less than 50 workers. And those small businesses with between 2 and 49 full-time equivalent (FTE) employees are not legally required to offer health insurance to their workers.
However, there are several solid reasons why these business owners should choose to offer small group healthcare coverage.
WHY SMALL BUSINESS OWNERS SHOULD OFFER HEALTH INSURANCE
The benefits that stem from offering employees health insurance coverage plans are quite real and substantial.
For example, your employees will be far more likely to experience higher levels of job satisfaction. Tied to this is a stronger degree of company loyalty among your employees. In addition, your company will benefit from having a stronger ability to attract and recruit qualified and top-notch candidates.
Several studies have shown that, among other benefits, employees with quality health insurance tend to be healthier employees.
When it comes to having employee health insurance one insurance provider points out,
“It can reduce absenteeism. A healthy employee is present and more productive. And the more physically sound workers are, the less prone they are to injuries and less likely they are to miss workdays.”
Along with healthy, happy workers, small business owners today must find ways to counter the trend of what one consulting firm referred to as the “Great Attrition” which is also known as the Great Resignation. The firm, McKinsey & Company, found in a recent study that 40 percent of employees stated that they are at least somewhat likely to leave their current job in the next 3 to 6 months.
However, 78 percent of employers reported that they offer at least one voluntary benefit. And this includes small business owners.
McKinsey & Company also reported that,
“Employers say they offer these benefits to support employee well-being, enrich core benefit plans, and attract new employees. Among nonmedical benefits, employers perceive dental, vision, and short-term disability as most important.”
However, along with the benefits to the business and the employees, there are some direct benefits for the small business owner, as well.
THE BENEFITS OF OFFERING HEALTH INSURANCE FOR OWNERS
One of the most direct and tangible benefits for owners are the tax incentives offered by the government as a way of encouraging small businesses to provide qualified health plans or QHPs.
According to one source,
“The contributions you make to employees’ small group health insurance benefits are tax-exempt, according to the Employer’s Tax Guide to Fringe Benefits from the Internal Revenue Service (IRS). This means those costs are declared for informational purposes only and are not part of any tax calculations for your business: they aren’t subject to federal income tax withholding, social security, Medicare, federal unemployment (FUTA) tax, or Railroad Retirement Tax Act (RRTA) taxes, and aren’t reported on Form W-2. Taking advantage of this incentive is particularly valuable — it can lower your tax payments, or in some cases even eliminate them completely.”
In addition, by offering your employees a formal health insurance plan or even make formal contributions to employee’s health care costs, the amounts you put toward their health care can usually be fully deducted as a business expense.
These include contributions you make to your employees’ monthly premiums, reimbursements made through approved Medical Reimbursement Plans such as Health Reimbursement Arrangements (HRAs), and even contributions you make to employees’ Health Savings Accounts (HSAs), a type of pre-tax savings account.
And as we have detailed in earlier articles here, you may be eligible for a small business health care tax credit, which covers as much as 50 percent of the health insurance premiums you pay.
These small business health care tax credits require that you meet the following criteria:
- Have fewer than 25 full-time employees and pay them an average salary of less than $53,000 annually.
- Offer a group health insurance policy and pay at least 50 percent of employee premium costs (dependent premium payments not required).
- Purchase coverage for yourself through the same plan as your employees.
In addition, you are not required to offer coverage to part-time employees to get this credit, but you may need to buy the group policy through the Small Business Health Options Program (SHOP) Marketplace to qualify.
J.C. LEWIS INSURANCE SERVICES CAN HELP YOU BENEFIT WITH HEALTH COVERAGE
At J.C. Lewis Insurance Services, we want to be your preferred insurance partner.
We bring more than four decades of experience and continue to offer quality health insurance plans. J.C. Lewis works only with the leading health insurance carriers licensed to do business in the states that we operate in.
As a family-owned and operated health insurance agency located in Santa Rosa, California, we are a small business, and we understand the particular needs and challenges business owners face. In addition to being specialists in finding and managing medical insurance plans for small businesses, we are also licensed and certified by each insurance carrier we represent.
So, whether you’re considering small group health insurance for you and your employees or you’re simply looking to make changes to your existing plan, we understand that you’ll likely have questions and concerns.
We always welcome your questions about health coverage insurance, and you can be confident that J.C. Lewis Insurance Services will help you find the right solution for your needs.
J.C. Lewis – make us your preferred partner to help you make the right decision for your health coverage needs.