Offering an employee benefits plan that includes group health insurance is usually not cheap, but employers have many good reasons to make this part of the compensation package that their business offers. If you haven't yet begun making group health coverage available to employees, here are four reasons to do so.
1. Recognize Your Business' Social Responsibility
First, many employers recognize that they have a social responsibility to take good care of their employees. While offering group health insurance isn't the only way to honor this responsibility, health insurance is certainly one way that your business can help employees. Everyone wants health insurance, and employees are appreciative when they can obtain it through an employer's group policy.
For some employees, having access to group health insurance is especially beneficial. Those who have large families can sign their entire family onto a group plan for less than it'd cost to purchase each person's coverage individually. Also, employees in high-risk categories can get more affordable coverage through a group plan than they can on the open marketplace.
Even if your business doesn't contribute a lot to the cost of group health insurance, employees who would pay more for health insurance in the private marketplace will be thankful that your business makes group coverage available.
2. Attract the Best Talent in Your Industry
In some industries and at certain levels, employees expect their employer to offer a benefits plan that includes group health insurance. They recognize the importance of this particular benefit, and they consider it along with salary and other forms of compensation when evaluating potential jobs.
To attract the highest quality talent, your business may need to make group health insurance available. Without it, you'll likely struggle to attract and retain skilled employees if your business is in an industry where coverage is expected.
3. Avoid Tax Penalties
The Patient Protection and Affordable Care Act, which was passed in 2014, instituted a mandate for larger companies. The law requires employers who have at least 50 full-time employees to offer health insurance to at 95 percent (or more) of their employees, and companies that fail to do this must pay a penalty. Coverage is offered through group health insurance plans.
Although the law has seen legal challenges and been revised since 2014, the mandate for employers is still in place in 2018. If your business has at least 50 full-time employees, you must either offer health coverage or face a penalty when taxes are due.
4. Get a Tax Break
In addition to helping your business avoid tax penalties, offering group health coverage also gets your business one or more tax breaks. The exact tax benefits your business will see depends on the size of the business.
For small businesses, there is a tax credit available. Businesses that have fewer than 25 full-time employees, pay employees an average annual salary below $50,000, and pay at least 50 percent of a qualifying group health insurance policy's premiums qualify for the Small Business Health Care Tax Credit.
Businesses that employ fewer than 10 people full-time and pay an average annual wage below $25,000 receive an even greater credit through the same program. These businesses receive 50 percent of the premiums they pay in the form of a credit.
For businesses of all sizes, any premiums paid for health insurance are fully deductible. Thus, businesses can deduct 100 percent of the premium they pay for employees' group health coverage as a business expense. This isn't as beneficial as a credit, but it still reduces a business' overall tax burden.
If your business isn't currently offering group health insurance and you'd like to start including a policy in an employee benefits plan, contact Koski & Co. for help finding a plan.