The health care industry has changed a lot within recent months. However, one thing that has remained the same is that small businesses with under 50 full-time employees are still not required to provide health care benefits. Employer sponsored health care can be costly for employers, which is why many small businesses choose not to offer it. On the other hand, there are some positive outcomes to providing health care to employees that may affect a business owners’ decision. It is vital to weigh the pros and the cons of offering employer sponsored health care.
Keeping employee morale high is important for creating a productive workplace. If employees are provided with the comfort of knowing that insurance is able to cover their medical expenses, then they will feel safer and more comfortable in their job.
Offering benefits will also cause the company to be more attractive to potential employees, who may turn down the job if they can’t procure health care through the employer. While married individuals and adults under age 26 may be covered under a parent or spouse’s health plan, anyone else will take into account the benefit of having health care when making their decision to work for a company—and oftentimes those are the most qualified individuals. Many businesses can offer lower pay rates as long as they have superior benefits.
Not only does offering health care cause employees to feel safer, but it also helps to keep them actively working. Most health care plans include coverage for preventative appointments, which can help ensure that employees stay healthy, and therefore take fewer sick days.
On the other hand, offering health care can be a big burden on a small business. Both the cost and complication of signing up for a health care can deter employers not to offer these types of benefits.
Fortunately, taxes are able help balance the cost to employers. The following excerpt from BizFilings explains how employer tax deductions for health insurance work.
You can offer employees something that increases their compensation package and yet allows you an income tax deduction for the contribution, so that your out-of-pocket cost is less than the value of the benefit to the employee. Self-employed individuals can deduct 100 percent of their health insurance premium costs as a business expense in 2003 and thereafter. You can always deduct 100 percent of premiums for your employees. If the business is incorporated, all costs for your own insurance as well as your employees’ is deductible.
Unfortunately, the issue with the tax deduction is that while the employer will be compensated, they still have to pay up front, which takes away from the company’s working capital. This can pose a problem for a small business, which is why each employer should examine the issue from a personalized standpoint.
Offering an employer sponsored health care plan to employees can be financially draining. That is where EAG Health comes into play. Our job is to find the best health care plan for employers that won’t exhaust their resources but will still keep employees happy and healthy. Contact us today so that you can get a head start on updating your employee health plan that is beneficial to both your business and your staff.