If you own a small business with fewer than 50 employees, you are not required to offer health insurance and benefits. However, doing so may enable you to enjoy some of the benefits. Think of health insurance and benefits as investments. They are a vital component of employee compensation. Health insurance and benefits are attractive tools many employers use to attract and retain top talent to their organizations.
Making the decision to offer these incentives is not one that should be made lightly. Here are some of the pros and cons you must consider as a small business owner before you decide to offer health plans and benefits to your employees.
- Effective Recruitment Tool – Organizations large and small are competing for top candidates everywhere. Offering an attractive health insurance and benefits package can help to give your organization an edge over all others and successfully lure a higher caliber of talent to your organization.
- Avoid Healthcare Penalties – Recent healthcare reform requires employers with 50 or more full-time employees or enough employees that are the equivalent of 50 full-time employees to offer health insurance. Small businesses that meet this requirement and fail to provide healthcare coverage, thus enabling employees to purchase their own coverage and receive tax credits for paying their own premiums, will be subject to fines and other penalties.
- Receive Small Business Health Tax Credit – Small business owners who have fewer than 25 employees may be eligible to receive tax credits if they purchase health benefits for their workers.
- Enjoy Tax Incentives – By offering employee health plans and benefits, you can create a more appealing compensation package for employees and receive tax deductions for those contributions, thus reducing the amount of your out-of-pocket expenses. The premiums you pay for your employees are 100 percent deductible. If your business is incorporated, you may enjoy more tax incentives by deducting the cost of your personal insurance along with the cost of employee insurance.
- Boost Employee Shopping Power – As a small business employer, you are not obligated to contribute towards your employees’ health insurance. Yet, you may still enable them to receive better rates by allowing them to take advantage of group rates they qualify for through your business. If your business has fewer than 50 full-time employees, you should consider purchasing health insurance at a discounted price through the Small Business Health Options Program (SHOP).
The biggest advantage that health plans and benefits offer small businesses is that they help to improve attendance. Health insurance offers employees coverage so they can receive preventative care and treatment so they can enjoy better health, resulting in the use of fewer sick days and personal time, which will boost your company’s productivity.
The Downside of Offering Health Plans and Benefits
Knowing the disadvantages can help you to make a better informed decision about whether or not it is in your best interest to offer health insurance and benefits to your employees. The cons for small business owners include:
- Affordability – Continuous increases in healthcare costs have made health insurance a resource that many small businesses find a challenge to maintain. It is an option that can make financial planning challenging because of the uncertainty and rate of increases.
- Workplace Tensions – Business owners who decide to pass some of the expense on to employees may inadvertently create a tension-filled work environment. Although this may be inevitable, look for ways to minimize the ripple effects by offering other benefits and perks.
- Potential Liability – Liability is something that you should take into consideration when selecting a health plan provider. Choosing a provider that commits malpractice could put you and your business at the mercy of your employees, resulting in you being sued.
By thoroughly investigating your options, you can improve your selection of health plans and benefits to maximize your return on investment and recruit the best talent for your organization. Click to view more Human Resources
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