Health insurance stands out as one of the most crucial offerings for employees. However, the advantages of providing health insurance extend beyond just meeting the needs of employees; they also significantly benefit employers—and their businesses.
In this blog, we'll delve into how employers benefit from providing health insurance coverage to their workforce.
Tax Benefits
While some businesses are wary of health insurance due to costs, providing this benefit for your employees can actually save you money.
The amount of money you spend on employee health insurance is tax-deductible, meaning you could save on your federal and state taxes and potentially qualify for a lower tax bracket. As a small business, you also have the opportunity to enroll in a Small Business Health Options Program (SHOP) which can qualify you for additional tax breaks like the Small Business Health Care Tax Credit.
This federal subsidy lowers your health insurance costs by up to 50%. In order to qualify for this, your business must:
- Have 25 or fewer full-time employees.
- Have an average employee salary of $50,000 or less.
- Cover at least 50% of your employees’ premiums.
- Offer health care coverage to all full-time employees through SHOP.
The smaller your business is, the larger your potential credit is. On average, businesses that have under ten employees with an average salary of $27,000 or less receive the highest tax credit.
This tax advantage can result in significant savings for employers, making it a cost-effective investment in their workforce's well-being.
Avoidance of Employer Shared Responsibility Payment (ESRP)
One significant way employers benefit from providing health insurance is the avoidance of the Employer Shared Responsibility Payment (ESRP) mandated by the Affordable Care Act (ACA).
Under the ACA, applicable large employers (ALEs)—or businesses with more than 50 employees—must offer affordable health insurance coverage that meets certain minimum standards to full-time employees and their dependents. Failure to provide adequate coverage may result in the imposition of ESRP penalties.
By offering qualifying coverage to their employees, employers can fulfill their ACA obligations and avoid these potential penalties, thereby safeguarding their financial resources and ensuring compliance with healthcare regulations. This not only mitigates financial risks but also fosters stability and confidence within the organization, contributing to a positive employer-employee relationship.
Talent Attraction and Retention
Offering health insurance coverage enhances your ability to attract high-quality candidates during the recruitment process. In today's competitive business landscape, offering health insurance sets employers apart from their competitors and makes them more appealing to potential employees.
People often prioritize health benefits when considering job opportunities, and a comprehensive benefits package, including health coverage, can be a compelling factor for job seekers when comparing offers from different companies.
Moreover, once hired, employees are more likely to stay with a company that provides comprehensive healthcare coverage, reducing turnover rates and associated costs.
By demonstrating a commitment to employee health and financial security, employers can position themselves as employers of choice, attracting top talent and maintaining a competitive edge.
Healthier and Happier Employees
Access to health insurance promotes employee well-being by ensuring they can seek medical care when needed and without financial stress. This not only encourages employees to seek timely medical treatment, reducing the likelihood of prolonged illnesses or complications that could lead to extended absences from work but also minimizes the spread of illness and improves overall workplace productivity.
Healthy employees are more productive, as they are less likely to miss work due to illness or medical appointments. Additionally, knowing that their employer cares about their health and well-being can boost employee morale and overall job satisfaction, leading to increased engagement and performance.
As businesses continue to navigate the challenges of talent acquisition and retention, prioritizing employee health benefits remains a cornerstone of effective human resource management and organizational success.
Providing health insurance is not only a valuable investment in the health and well-being of employees but also a strategic decision that yields numerous benefits for employers. From attracting top talent and enhancing employee loyalty to reducing costs, offering comprehensive health coverage contributes to a healthier, more productive workforce and strengthens the employer's position in the marketplace.
Please let us know if you have any questions. We understand that local companies have unique needs that most national firms don’t consider or struggle to identify. This leaves your people with a less effective, one-size-fits-all benefits plan. However, our ability to cater to the needs of our clients comes from decades of client partnerships. This perspective allows us to fully address unique needs and generate creative benefits plans.
You shouldn’t have to worry about just being a number, offering a generic plan, or getting the unique support you need. Call us today.
This Benefits Insights is not intended to be exhaustive nor should any discussion or opinions be construed as professional advice.