What are the Small Group Benefits When it Comes to Insurance Coverage?
What are the Small Group Benefits When it Comes to Insurance Coverage?
The 2012 U.S. Census revealed that there are around 28 million small businesses in the U.S. that provide employment to as many as 52.6 million Americans. Now, while it isn’t a legal requirement for small business to provide insurance coverage to their employees, it’s certainly one of the most important factors when it comes to recruiting and retaining top talent.
Traditional Plans vs. “Managed Care”
The small group benefits offered by a particular group health insurance plan depend on many different factors, including whether it’s a traditional plan or a “managed care” plan.
Traditional plans often come with higher premiums, but offer access to a wide range of doctors and hospitals. On the other hand, a managed care plan would usually cost considerably less, but it would be a little limited when it comes to choosing doctors and hospitals.
Both types of plans are sold by major health insurance providers, and most states require that the employer covers at least 50% of the premium costs.
However, many employers think that they need to pay 100% of the premium costs, discouraging them from offering this crucial employee benefit. But most of them agree that not offering adequate health insurance coverage affects their relationships with the employees in an adverse way, with as many as 75% revealing that their business suffers due to not offering small group benefits related to health insurance coverage to their employees.
Reasons for Providing Health Insurance Coverage to Your Employees
After going through the information shared above, it can be concluded that providing employees with health insurance coverage may not be as expensive as many employers think, and not doing so may not allow the business to grow at its full potential.
With that being said, let’s take a look at why a small business should consider providing health insurance coverage to its employees, though it isn’t required to.
Recruiting and Retaining Top Talent
As mentioned above, group insurance coverage is considered to be one of the most important employee benefits nowadays, and helps attract new talent. This is especially true when it comes to small companies, as most new employees may be tempted to join a large business instead of a small business.
However, great employee benefits, including group health insurance coverage, can help attract them to your company. Similarly, even some of your best employees may consider joining another company that offers better employee benefits at some point in the future, but a great group health insurance plan may prevent them from doing so.
Tax Benefits
There are also many tax benefits of offering group health insurance coverage to your employees, for both the employer and the employees. Firstly, all the expenses incurred for providing the insurance coverage would be 100% tax-deductible for the business.
Similarly, if the employer puts in some efforts to take care of the legal formalities, even the employees’ contribution can be made on a pre-tax basis. The employer can also make the employees’ contribution BEFORE paying them, so that they won’t have to deal with any tax liabilities related to their contribution and end up with a higher take-home pay than they otherwise would.