Find out the reasons why small businesses decide to offer small business health insurance.
Employers often decide to offer small business health insurance for many reasons. As one of the top employee benefits, group health insurance is not only prized by employees, but also seen as a significant and valuable asset by many small business owners.
Continue reading to find out the reasons why employers offer small business health insurance, as well as the most important factors business owners consider when selecting a group health plan.
What is the number one reason why employers offer small business health insurance?
According to a recent eHealth survey, although companies offered health insurance for a variety of reasons, 66 percent of small businesses decided to provide a group health plan in order to recruit and retain the best workers. A supermajority of business owners prioritized attracting top talent to their organization as the primary rationale for choosing to offer small business health insurance.
The eHealth survey also found that 51 percent of small business owners said that hiring and retaining the best workers was the single most important factor that prompted them to offer health insurance coverage to their employees. A sense of moral responsibility was the second most important reason, although it was chosen by only 20 percent of respondents.
There are many compelling and strategic reasons why focusing on quality employees is a top factor for offering small business health insurance. For instance:
- Becoming a more desirable employer – A company can be seen as an employer of choice to potential hires by offering attractive employee benefits such as group health insurance.
- Differentiate from the competition – A small business can stand out from competing companies that do not offer either health insurance or other popular benefits to their employees.
- Improving loyalty and retention – Hiring the right new employees can be expensive, and finding employee replacements can be time-consuming. Group health insurance may contribute to keeping an organization’s highest quality workers on board for the long run.
Overall, deciding to offer small business health insurance can help employers demonstrate that they value their employees while also keeping their best interests in mind.
What are other top reasons to offer small business health insurance?
In addition to recruiting and retaining the best workers, employers also had other compelling reasons to offer health insurance as one of their employee benefits.
- Moral responsibility – According to the eHealth survey, 43 percent of small business owners felt a moral obligation to support the livelihood of their workers through providing group health insurance, viewing it as a necessity that their employees should not live without.
- Encourages efficiency – 27 percent of small businesses said offering health coverage promoted greater productivity among their employees. This may have to do with workers taking less sick days, or having the assurance of knowing they have access to medical care if needed.
- Workers cannot afford it on their own – 26 percent of small employers realized that their employees would not be able to afford health coverage on their own, and decided that providing group health insurance was the best path for helping them manage medical costs.
- Tax benefits – 11 percent of employers chose to offer small business health insurance due to tax benefits. Even though this reason was not cited as frequently, tax savings are still an important consideration, especially in terms deducting the cost of premiums and potential tax credits.
While small businesses had many reasons to sponsor employee health coverage, a combination of moral and economic justifications most broadly characterized employer decisions to offer small business health insurance.
What is the most important factor when selecting a small business health insurance plan?
When choosing a health plan, small businesses prioritized affordability and cost as their primary considerations, according the eHealth survey.
Small business owners in the survey conveyed how strategic financial reasons related to budget and coverage preferences drove their decision-making when evaluating group health coverage.
- Affordable employer-sponsored coverage – 34 percent of small business owners selected a group health plan due to the affordability of monthly premiums. This may be due to how employers cover the expense of employee health care through cost-sharing with workers.
- Managing out-of-pocket costs – 30 percent of employers said that affordable out-of-pocket costs, such as copays and deductibles, were the most important factor when choosing a plan. Such costs are especially important to consider for those who need more frequent medical services, including office visits and prescription medications.
- Affordability of employee cost-sharing – 11 percent of small businesses replied that the affordability of monthly premiums for employees was the top factor they considered when looking at health plans. Workers need to make these payments to keep their group coverage.
- Robust health care network – 10 percent of small business owners cited the importance of having a strong network of medical providers. Benefiting from preferred hospitals and specialist care centers is always a significant factor when deciding on any group health insurance plan.
Ultimately, most employers sought to balance managing costs with maintaining the quality of medical care for themselves and their employees.
Every small business has a unique reason to offer health insurance
You may have been surprised to learn the many reasons why employers decide to offer health benefits to their employees. While each company has its own unique preferences, most business owners believe that affordable group health coverage could help improve the success of their employment and hiring strategies while also keeping their workers’ medical needs in mind.
Whatever your reason may be for offering small business health insurance, eHealth can help you find the right coverage that fits the goals of your company and employees. To find out how your small business can enroll in a group health plan, visit eHealth.com or speak with one of our licensed health insurance agents today.
This article is for general information and may not be updated after publication. Consult your own tax, accounting, or legal advisor instead of relying on this article as tax, accounting, or legal advice.