Posted By:

Kathy Eastman on June 26, 2014

Why Your Small Business Should Offer Employer Sponsored Insurance

The ACA has had a big impact on the state of health coverage, and left some businesses wondering if they should offer employer sponsored insurance. While there are obvious costs involved, the overall benefits usually outweigh these costs. Here are some of the top reasons why your small business should offer employer sponsored insurance and details on what you can expect to pay.


Employee Benefits

Offering coverage can have a positive impact on the overall health and wellbeing of your workforce. Preventative care means that employees are less likely to be absent and miss long stretches of days. According the Centers of Disease Control and Prevention, “healthier employees are less likely to call in sick or use vacation time due to illness, and companies that support workplace health have a greater percentage of employees at work every day.”

This tends to translate into more annual income and more financial stability. They also have the peace of mind that they will be cared for if they acquire a serious illness. Having health coverage is especially important for lower paid workers and those making minimum wage. If these individuals get sick, they could definitely encounter difficulties paying for medical bills.


Why Have Health Insurance?

Besides the employee benefits, there are three distinct advantages for you the employer. First, it’s common to experience higher productivity among your workforce because employees tend to be in better health and are less likely to have accidents. When workers aren’t encumbered with illness, they’re likely to accomplish more in less time. This ultimately means you get more from employee resources, which can boost your profit margin.

Second, there are some significant tax advantages to offering employer sponsored insurance. Although the maximum small business tax credit was only 35 percent of premiums paid for small business owners in 2013, there is now a maximum tax credit of 50 percent in 2014. That 15 percent spike can really be a big help for employers.

Third, this can serve as a recruiting tool so that you can find the top talent in your industry. Having a quality healthcare plan in place is often a motivating factor for prospective employees and can give you an edge over competitors who lack coverage. If you’re looking to amass a team of professionals and minimize your turnover rate, this is a great way to do it.


Average Cost of Health Insurance

While there are numerous factors that determine the cost of health insurance, a 2013 Employer Health Benefits Survey found that “annual premiums for employer sponsored health coverage were $16,351. Workers on average paid $4,565 towards the cost of their coverage.” However, with tax credits and the return on investment you’re likely to see from higher output, that number should diminish considerably.

Like most areas of business, there are pros and cons to health insurance. When you look at the big picture though, it usually makes sense to offer employer sponsored insurance. Not only do you get happy and healthy employees, but also you should be able to do more with available resources and build a stronger company.


Like what you’ve read? Click here to subscribe to our blog.

small business obamacare