Having trouble recruiting and retaining quality employees? You aren’t alone. Unemployment is currently only 3.6%, the lowest since 1969. Businesses all over are competing for the same group of talent. They are hiring employees away from competitors and even from other industries, all the while offering pay incentives and shouldering the expense of retraining. Such is our job market today.
When it comes to heath care, the term “small business” can be misleading. In fact, small businesses can have quite large operations. A small business has less than fifty employees, including full time equivalents. If employee count is forty-nine or less, then the company is a small business per the IRS when purchasing health insurance. Large businesses operate under a different set of rules which are not addressed in this article.
Many factors other than health care affect recruiting and retention, but a competitive employee benefit package is a primary driver of job satisfaction and is one element employers can control. Although cost is a consideration, it is only one of several when deciding when health coverage should be offered. Consider the following:
Do competitors offer health insurance?
Competitor offerings are a primary factor in recruiting and retaining quality employees. It is difficult to participate in the labor market without a health plan if most competitors provide this benefit. Without it, a business needs to offer a significantly higher wage to offset the cost of the employee purchasing health care on their own.
Do your employees expect health insurance as a benefit?
This answer differs by industry. Industries with a high turnover rate typically do not offer health coverage because administration is time consuming. For those with a stable workforce, employees usually prefer to obtain health insurance through their employer, enjoying the protection the group provides.
How much will it cost?
Expense for small business health insurance is driven by plan design as well as the age of employees and dependents. Insurance companies usually require an employer to contribute at least 50% of the “employee only” cost, meaning the expense of the employee without any dependents. The business can pay more, of course, but not less. The Affordable Care Act provides a special enrollment period in December that does not have this requirement for employer contribution, so contact your insurance agent if this is a concern. In addition, certain small businesses may qualify for a tax credit of up to 50% on certain costs. Learn more about the SHOP program below.
Which insurance company has the best doctor network?
Health care can be limited by location. When considering insurance companies, ensure the physician network provides coverage all employees can access. This will provide better discounts and pricing.
How difficult is a health insurance plan to administer?
The first time a company applies for health insurance will require gathering employee and dependent information for their ID cards. An insurance agent can assist with much of the initial paperwork. The agent may also provide a benefits management system (we offer Employee Navigator) that streamlines employee enrollment. Once all employees are enrolled, maintaining the health plan through the year consists of adding and deleting employees, reviewing statements, and paying bills.
Are business health plan costs tax-deductible?
Yes, an employer can deduct the premiums paid. In addition, the government offers a Small Business Health Options Program (SHOP) that provides a tax credit worth up to 50% of the cost paid for employees’ premiums. Coverage availability varies, but businesses generally qualify if they have less than 25 employees, an average salary less than $56,000, they pay at least 50% of employees’ health costs, and they offer SHOP coverage to all full-time employees. Ask your insurance agent for more details on the SHOP program.
Can employees make their contribution using pretax payroll deductions?
If employees are required to contribute to the premium cost, the business can set up a cafeteria section 125 plan that allows employees to pay with pretax earnings, saving them money.
Which plans do I offer?
Most insurance companies will allow a business to offer two or three health plan selections. Offering at least two is good as employees feel they have options and are not forced to join a plan chosen by management. The business’s contribution can be the same for both plans.
What if I decide not to offer health insurance?
For most businesses, health insurance is one of their biggest expenses. If the budget isn’t ready to assume the additional cost, then now may not be the best time. Costs increase 5% to 10% each year, so if the business offers health insurance one year and drops it the next, it could decrease employee retention.
When deciding when to offer employee health insurance, there is much to consider. But if employee recruiting and retention is a high priority, a group health plan can play a critical part. Questions on offering employee benefits? Contact your Bankers Insurance agent. Not a client of ours? Let us earn your business! Each client is assigned a personal agent in our office, given their email address, and provided a phone number that rings right on their desk.
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