Health Insurance Benefits and Your Small Business
Maintaining your highly-skilled and experienced employees paid less than at other businesses similar to yours can be more likely if you offer health insurance coverage. Especially due to the Covid-19 pandemic, experienced employees with highly-marketable skills and excellent annual performance reviews are viewing employer-sponsored health insurance as extremely important to them. The recent economic downturn may preclude your ability to offer increased salaries in the next year or two, but providing group health insurance may be a stronger inducement for employee retention than increased pay over the next five years.
The following describes the various ways that your business can benefit from offering health insurance as an employee benefit to your current and future employees.
Tax Incentives for Offering Employer-Sponsored Health Insurance
A small business with fewer than 51 employees may be eligible for the federal Small Business Health Options Program (SHOP), and enrollment in SHOP is the one way that eligible small businesses can enroll in the Small Business Healthcare Tax Credit. According to the federal website – HealthCare.gov – this credit could be worth up to 50 percent of the costs paid by your business for employees’ health insurance premiums. Notably, the tax credit is highest for businesses that have fewer than 10 employees.
According to the nonprofit organization – Small Business Majority – many expenses related to group health insurance for employees are tax-deductible as ordinary business expenses. Meanwhile, enabling your employees to contribute to the cost of their health insurance premiums on a “pre-tax” basis can also enable them to take home more of their earnings than otherwise.
Preserving the Health of Your Workforce
Maintaining the overall health of your employees can promote productivity and prevent needless absenteeism due to poor health. Uninsured adults are more likely to be unaware of having high blood pressure or diabetes, and therefore are at higher risk of developing preventable complications due to these chronic disorders. Furthermore, cancer is often diagnosed at a later (and often terminal) stage in employees without health insurance.
According to the Missouri Foundation for Health, the uninsured in the US also are less likely to undergo preventive screenings and to delay care if ill as compared to the insured in the US. The business-impacting consequence can be permanent disability. Meanwhile, it is becoming well-recognized that employees infected with Covid-19 who do not have health insurance are more likely to discount their symptoms as minor and, thereby, spread Covid-19 to other employees. Therefore, providing health insurance coverage for your employees can impact the ability of your business to function optimally.
What Type of Plan is Affordable for Your Business?
Maintaining financial viability is essential for your business to afford keeping employees on the payroll. Therefore, ascertaining the cost per employee of offering health insurance can help you to better grasp which type of health plan makes sense for your specific business. If your net worth as a business is increasing annually (or at least not decreasing) and your employees have mostly worked for your company for less than eight years – and are under age 45 – offering a health insurance plan with a low monthly premium and low deductible may provide motivation to these employees to not seek other employment (albeit costing you more to offer such a plan).
However – if you are unable to afford offering health insurance without foregoing replacement of employees as they leave your business (or laying-off existing employees) – offering only a high deductible Preferred Provider Organization (PPO) health plan that requires the use of “in-network” providers may improve the motivation and morale of your employees while curtailing your overall health insurance expenditure to align with your tight finances.
As noted by the Society for Human Resource Management (SHRIM), mid-size and large employers are far more likely to self-insure than businesses with fewer than 100 employees. This is chiefly because businesses that self-insure pay the cost of the health insurance claims themselves (although this is somewhat mitigated by purchase of a separate “stop-loss” policy). The primary reason determined by SHIP for an increased trend by large employers to self-insure was to avoid some of the ACA’s coverage mandates; however, self-insuring increases the assumed financial risk.
While many small businesses do not offer dental insurance, this can be extremely costly for your employees (and especially your lower-paid employees). Consequently, you may have employees requiring frequent dentist visits to extract teeth and/or perform root canals that could have been prevented. Both the cost of individually-purchased dental insurance and the cost of uninsured dental care can lead to psychological stress among the affected employees.
Severe financial strain due to the inability to pay dental bills can also lead to stealing from co-workers or your clients/consumers – which can all have a negative financial impact on your business. By providing dental insurance (in addition to health insurance), your business can become even more competitive from an employee recruitment standpoint.
Consider a consultation with UrHealth Benefits if you are thinking about offering group health insurance to your employees, or are interested in exploring the range of group health insurance options available to you as a small business.