According to the September 2020 United States Census Bureau report, approximately 92 percent of all Americans have some form of health insurance.  In addition, approximately 55 percent of those insured Americans receive their coverage through their employer or their spouse's employer.

As the costs for private insurance continue to rise, more and more workers will be looking to their employers for cost-effective employee health insurance plans. This is placing even more importance on businesses to compete not just on salary, but on offering total compensation packages with comprehensive benefits.

Public health concerns continue to mount in response to crises such as the COVID-19 pandemic.  With each new development and the reports of a spreading disease or virus, health and wellness concerns become more of an employee focal point.

Why Should You Provide Employee Health Insurance?

Investing in employee health insurance can help your business run more efficiently and effectively in a variety of ways. A health insurance package benefits not only your employees but you and your company as well. Investing in health insurance is – in essence – investing in yourself.

Some of the advantages to providing health insurance include:

• Employee productivity. Employees with health benefits are more likely to avoid lengthy sick leaves and return to work quickly after an illness. This might not be the case if an employee is unable to receive proper treatment and medications. Depending on your business, paying for employees' health benefits is more cost-effective in the long run than dealing with the missed time and productivity caused by their absence from work.

• Attracting and retaining talent. Benefits are an effective tool for recruiting and retaining top talent. Keep in mind that rival companies, whether large or small, compete not only for consumers but also for employees. By including benefit-driven incentives in your compensation packages, you will better compete for top talent.

• Promoting wellness. A group health plan results in a larger focus on workplace wellness. Providing for workplace health insurance may be a starting point for workplace wellness services or other campaigns aimed at motivating and encouraging workers to lead healthier lives.

• Sending a positive message. Providing health benefits will demonstrate to your employees that you care for their well-being and happiness. You will show that you respect your employees and see them as an asset to your company. This appreciation, in turn, will contribute to the development of a positive and healthy corporate culture.

• Tax Advantages. You can provide employees with a plan that boosts their pay while still allowing you to subtract the contribution from your taxes. The out-of-pocket expense is then less than the value of the gain to the employee. You can deduct 100 percent of their health insurance premiums as a business expense.

When Should You Provide Employee Health Insurance?

Every employer would prefer to offer top-notch benefits the moment their company opens its doors for business, but that is not always realistic. It can take time to build and maintain a business plan that supports the added costs of employee health insurance.

However, every company reaches a point at which health insurance is either a requirement or at minimum a necessity to remain competitive. The two primary instances are as follows:

1) Company size. This is the easiest “when” decision. The Affordable Care Act requires that employers with 50 or more full-time workers (or a mix of full-time and part-time employees that equals 50 full-time employees) have sufficient health benefits or face penalties if their employees collect premium tax incentives to purchase their own insurance.

Starting in 2021, the tax penalty is $2,700 per full-time equivalent (FTE) employee excluding the first 30 employees. For example, if you have 70 employees, your tax penalty will equal $2,700 x (70 -30) or $108,000.

2) Employee turnover. If your company is having trouble retaining employees, it is likely time to provide employee health insurance. Employee surveys can help determine what is most important to your specific workforce.

As private insurance becomes increasingly more expensive, employees are rushing to jobs offering benefits packages. Businesses today recognize that providing a group health care package for their employees is gradually becoming more of a necessity than it is a luxury.

Businesses will typically receive lower insurance rates than will individuals. The higher the number of participants in a health plan, the lower the cost of premiums for each participant.  

Risks are spread out over a wider community of people, keeping costs down. As a result, it is beneficial for a company owner to expand coverage to workers both to save money on health benefits and increase your chances of retaining high-quality talent.

Before rushing to choose a plan, however, do some research to see what your competitors are offering. Always remember that you are competing on more than just salary alone.

Planning is Not Easy

Deciding why and when to offer employee health insurance to employees can be difficult. In a perfect world, you would offer every potential employee the best possible coverage to keep high-quality talent rushing through your front door. At first, however, the associated costs seem daunting.

Although providing employee benefits can be more expensive initially, the long-term benefits will outweigh those up-front expenses and promote enhanced employee performance. In the long run, you will find that the expense of an employee compensation package is justified.

Benefit Concepts is here to help you find the cost-effective health plans necessary to make you more competitive in the job market, promote employee morale, and keep revenue flowing. Do not let a lackluster benefits package become the deciding factor for potential employees.

Contact us today to discuss what insurance plans can best help you attract the talent necessary to grow your business.

NOTE: This content is not intended to be taken as legal, benefits, or HR advice. Since regulations change over time and can vary by location and employer size, consult a licensed broker or HR certified expert for specific guidance.