Offering Health Insurance as a Small Employer

Small businesses and the people who own them are the backbone of their communities. In a larger, interwoven sense, when combined with similar-sized businesses across the United States they are the backbone of this country. While the intrinsic benefits of owning a small business are numerous, providing health insurance to employees is not necessarily one of them. For many employers, the expense has not been affordable, and in some industries with higher employee turnover, the obligation seems as appealing as a can of worms.

This may be changing as there are several benefits to offering health insurance. Here are some examples:

Pre-tax payment of premiums. The employer and the employ deduct the cost of premiums from their income resulting in a 30% savings on average versus paying individual premiums with after tax income.

Tax credits. The IRS offers a Small Business Healthcare Tax Credit to qualifying businesses who offer benefits to their employees. If you’re an employer with fewer than 25 full-time equivalent employees, pay an average wage of less than $50,000 (as adjusted for inflation beginning in 2014) a year, and pay at least half of employee health insurance premiums, you may qualify for the credit.

High Deductible, Lower Premium Plans. It is more and more common for employees to select plans that allow Health Savings Accounts (HSAs). By design they are lower in cost than traditional plans with copays, and so more affordable. And owners have the same opportunity as employees to save money for future health care needs on a pre-tax basis.

Offering benefits attracts high-quality employees. A competitive benefits package offered to potential new hires can be the deciding factor between an employee choosing your company over another. Attracting higher quality employees increases efficiency, attentiveness, and morale. Working conditions are better and ultimately the bottom line!