For any business, big or small, benefits serve as a crucial part of employees’ remuneration package. In fact, employees look forward to health care benefits the most, coupled with holidays and monetary perks. Therefore, it makes sense for business owners to give serious thought to offering health benefits. Not only does this work in the employees’ favor, but it also helps employers attract and retain high-performing staff and avoid exorbitant expenses in the long run.
One of the main reasons employers willingly provide health care benefits is to take advantage of economical health insurance plans, which in turn, provide them with tax breaks.
While offering health care benefits is not mandatory for most small businesses, one cannot deny that they are a huge draw for employees. However, small business entrepreneurs will do well to weigh the advantages and limitations of offering such benefits before making a decision.
Here are a few things to consider about employee health benefits:
- Different employees have different health needs, which is why benefits that may be suitable for one employee don’t work for another employee. The appeal of health care benefits will depend on the demographics of your company to a great extent.
- It makes sense to offer different health care benefits to your employees and let them choose according to their requirements. They will probably be more enthusiastic about it if they are given the freedom to select the package that best fits their lifestyle and health goals.
- The best way to find out which aspects of health benefits matter most to your employees is by asking them. When deciding which benefits to offer your employees, consider asking them about their priorities. This is a great way to ensure that you don’t end up wasting money on benefits that are meaningless to them.
Health Insurance for Employees
One of the most important (and costly) health benefits a business can offer its employees is health insurance. While this isn’t mandatory for businesses employing fewer than 50 full-time employees, it can play a role in hiring and retaining high-quality talent.
Most companies that offer health insurance to their employees purchase group packages directly from insurance providers or pick from the options offered by new health care marketplaces created by the Affordable Care Act, also known as Obamacare.
Further, small businesses can consider offering health care through the SHOP Exchange and compare different plans online. Their options can make such businesses eligible for tax breaks. For example, did you know that employers with fewer than 25 full-time equivalent employees may be eligible for the small business health care tax credit?
As far as health insurance cost is concerned, businesses will have to consider where they purchase their company plans. Sometimes the costs can be high, which is why the Affordable Care Act can be a good place to explore. Small businesses looking to purchase a group plan directly from an insurance provider can do so upon getting a quote either through their website or an insurance broker.
Also, if you’re planning to go ahead with offering health insurance benefits, know that there is a series of laws that you will need to play by in terms of the coverage you offer.
Pros and Cons of Offering Employee Health Care Benefits
Deciding whether or not to offer employee health care benefits can be a dilemma for small businesses. A thorough evaluation of the situation should help small business owners decide.
Some of the advantages of offering health benefits to employees are:
- It helps you draw in and keep the most talented employees in your firm. However, the effectiveness of offering health insurance will depend on whether or not your direct competitors or similarly-sized employers in your industry are offering it as well.
- As a small business, you are entitled to certain tax advantages even if you offer your employees a component that increases their remuneration. This means that your out-of-pocket cost will be less than the benefit received by your employees.
- Self-employed people can deduct 100 percent of their health insurance premium costs as a business expense. As a business owner, you can deduct such premiums for your employees. Further, if your business is incorporated, your own insurance cost (as well as that of your employees) is deductible.
- Small businesses with less than 20 employees can use their health care tax credit when they buy health insurance for employees.
- If you’re not in a position to contribute toward your employees' health insurance, you can offer them group rates for buying it through your business.
- Insurance plans offer preventative care, without which could result in having more employees not reporting to work for long periods of time due to serious illnesses.
Some of the disadvantages of offering health benefits from the small-business point of view include:
- Health care costs have witnessed a sharp increase in price over the last few years. Small employers may find this to be a costly affair, making financial planning extremely difficult.
- Sometimes, small businesses share the cost of health insurance with employees as a means to keep their expenses under control. This means passing on additional costs to the employees, which may turn out to be an unpopular decision that causes more complications.
- You could end up spending a considerable amount of time finding the right insurance options, filling out forms, remitting premiums, and acting as an intermediary between your employees and the insurer, as well as dealing with other tasks.
Every penny earned or spent by small businesses makes a huge difference to their bottom line. It is, therefore, only natural for them to think twice before introducing employee wellness policies that they know will involve company expenditures. Weighing the pros and cons of any plan can go a long way in providing clarity in such matters. Any financial relief in terms of tax credits and deductions is always welcome, and if employers can create a win-win for themselves and their employees, it will be easier to go forward with the policy.
Swati is a qualified dietitian at Practo. She has a Masters degree in Dietetics and Food Service Management. She is a strong believer in spreading the goodness of ‘nutrition through healthy eating’. As a responsible dietitian, Swati examines her patients’ health history carefully before recommending any diet or workout regimen because everybody has different requirements.
Swati has also taken it upon herself to debunk myths in diet and fitness through practical advice in her articles. This helps her readers learn the essence of healthy eating and make the right choices in their daily diet. Swati has been helping people live healthy and active for the past 4 years, by recommending diet plans that fit individual preferences and health parameters.