One of those challenges business owner’s face is attracting and retaining the best employees. Numerous surveys have shown offering a comprehensive benefits package that includes healthcare coverage is important. In fact, one survey even showed 4 in 5 employees want benefits or perks more than a pay raise.
There are several different options available to you if you choose to offer your employees medical insurance coverage, from private health exchanges to using the federal government’s SHOP exchange to purchase policies.
Choosing group medical insurance, in particular, provides several advantages for small business owners and their employees. We’ll explore below some of these benefits and what they mean for your business.
Group Coverage Offers Convenience
Employer-sponsored health insurance plans are offered to eligible employees and dependents. These highly-sought-after benefits offer convenience for employees in several ways.
Because an employer already has chosen a plan, employees simply sign up and are spared the time it takes to shop for plans.
They also offer convenience to you as a business owner because you can tailor the group insurance plan to meet your needs as well.
If budget is a concern, for example, group health plans often offer a high-deductible option with a health savings account. This reduces the cost to your business, while at the same time offering coverage to your employees with a tax-exempt savings plan that can be used to pay medical expenses.
You And Your Employees Save Money
Employers and employees often divide the cost of health insurance premiums. Depending on the percent of the plan’s premium you pay, this may save your employees more money than if they purchased individual health insurance plans.
Premium contributions made my employees also are not subject to federal taxes. That means contributions are made pre-tax, and a worker’s taxable income is lower than the actual income.
For employers, the Affordable Care Act gives tax credits to small businesses that offer group insurance plans. This assists with offsetting the costs of purchasing group coverage for your employees.
To qualify for the tax credit, the IRS says you must:
- Have fewer than 25 full-time equivalent employees
- Pay average wages of less than $53,000 a year per full time employee (check each year in case there is a new inflation-adjusted pay requirement)
- Offer a qualified health plan through a Small Business Health Options Program Marketplace (or qualify for an exception)
- Pay at least 50 percent of the cost of employee-only healthcare coverage for each worker
The tax credit is available for two consecutive taxable years, and covers up to 50% of premium expenses.
Size Doesn’t Matter
The Affordable Care Act requires businesses who employ more than 50 people to offer approved health insurance to their employees. Many larger businesses that still consider themselves as small business enroll in group medical insurance.
However, even if you only have one employee, you can enroll in group medical coverage.
Owners typically are counted as employees, so sole proprietorships with one employee usually are allowed under federal law to purchase group coverage. The same goes for partnerships with no employees, since by definition partnerships have two or more partners.
Plans Offer Protection
Employees who have health insurance have access to preventative care that in the long run, may help them avoid serious health issues. Offering that safety net for your employees can go a long way in retaining and protecting your employees, who without it, may incur burdensome debts.
Group medical coverage also offers protection for employers, since group disability and health insurance can protect your investment if an employee becomes too sick or injured to work for a period of time.
And, even short-term illnesses can impact work performance and productivity. Healthier employees miss less work, and preventative care can help ensure employees and their families are well taken care of - before they become sick.
A Broker Can Help With Options
When it comes to keeping your employees happy, group insurance plans can be valuable to both you and your workers. But with several options out there, how do you know which is best for your business?
One of the greatest advantages to group medical insurance is that often, insurance companies work with licensed agents or brokers to ensure several options are available to small businesses.
A professional insurance broker can offer personalized service by doing the legwork to find health plan options for you. They understand the complexities of health insurance and help you make sense of it. They also assist you with paperwork, advocate for you when you have any issues with claims and help you through the renewal process.
The best agents work with several insurance companies, and because they get paid a commission by the insurance company, working with one is at no cost to you.