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Offering Health Insurance to Your Employees: A Must or Not?
The Affordable Care Act requires companies who have more than 50 employees to offer health insurance. If you have fewer than 50, the choice is entirely up to you.
Like most things in life, there are many factors to consider when deciding whether to offer health insurance to your employees. The decision can have some serious financial implications and is not one that should be made lightly.
Health insurance is something employees want and need, perhaps more than anything else besides a paycheck, work/life balance, and opportunities to advance. Not offering insurance can be a real detriment to your recruiting potential, especially in a tight job market.
Here’s what you need to know about how to give your employees what they want without creating extra headaches for your organization.
Why Health Insurance?
According to the Kaiser Family Foundation, only 30 percent of private sector firms with fewer than 50 employees offer health insurance. If a candidate is weighing multiple offers, health insurance might be enough to sway a decision in your favor.
Offering health insurance also saves your organization money on its taxes. Contributions to employee healthcare are tax deductible, and your payroll taxes are reduced by 7.65 percent of employee contributions. On top of that, businesses with fewer than 25 employees may be eligible for the Small Business Healthcare Tax Credit.
Beyond the financial benefits, the healthier your employees and their families are, the more productive they’ll be in the long run. They’ll take fewer sick days and be able to prevent medical emergencies that require them to be out of the office at the last minute.
Health insurance is also a signal that your organization values its employees, which can help improve your company culture, employee retention, and recruiting efforts.
HMO vs PPO
So, you’ve decided to provide health insurance, but where do you begin? The two most common types of employee health insurance plans are a Health Maintenance Organization (HMO) or a Preferred Provider Organization (PPO).
HMOs typically cost less for employees but are more restrictive in terms of which doctors you can see. PPOs provide more flexibility but come with higher deductibles. An insurance broker can help you determine which plan is best for your organization.
Give your employees even more flexibility by offering a Healthcare Savings Account (HSA) as part of your insurance package. This allows them to put aside pre-tax dollars and spend them on qualified medical expenses, reducing their tax burden and forcing savings for planned and unplanned medical needs.
Dental and Vision Insurance
No matter whether you choose a PPO or an HMO, it will not cover eye and dental exams and related expenses. These are additional plans that you’ll need to purchase for your employees.
Unlike primary health insurance, the ACA does not require anyone to provide medical or dental insurance. However, you’ll likely find that the cost to you is minimal for the return that your employees receive.
A healthy smile and good vision go a long way toward improving someone’s self-esteem. And, let’s face it, a polished outward appearance is necessary for sales and related fields.
Investing In Your Employees
Selecting and administering a health insurance plan for your employees will no doubt require additional time and energy on your part. However, it’s well worth the effort to recruit and retain a happy and healthy workforce.
Check out our podcast for more on the pros and cons of health insurance.
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