Updated August 1, 2019
Offering small business health insurance provides significant advantages and cost savings for both small business owners and their employees.
Although offering group health insurance is optional for employers with less than 50 full-time or full-time equivalent employees, there are many practical reasons to provide health insurance plans.
Learn about the top 5 reasons to offer small business health insurance.
A 2016 Glassdoor survey observed that “The factor with the single biggest impact on employee satisfaction was the quality of employer-provided health insurance plans.” Being enrolled in group health insurance is a core benefit highly valued by today’s employees.
The 2018 eHealth report on small business health insurance trends found that 66 percent of respondents said they offered small business coverage because it helps them recruit and retain top quality employees.
Providing a competitive compensation package that includes group health insurance can help small business owners attract new talent and promote loyalty and satisfaction among current employees.
Group plans tend to have better pricing and be less expensive than individual plans, and small business health insurance policies often have lower premiums per person.
According to the 2018 eHealth report on small business health insurance:
Employers typically share premium costs with employees, meaning that employees may find small business group plans to be more affordable than purchasing their own individual or family plans.
Healthy employees are a valuable asset for any business, and offering group insurance plans can help drive employees to perform at their professional best. Healthier employees tend to:
By investing in the long-term health of their employees through offering health insurance, employers can gain from the benefits of building a more effective workforce.
Another reason to offer small business health insurance is that your own family can join the group plan. Depending on your situation, your family could join the plan as either dependents or employees (in the case of a family business).
Generally, small group plans allow qualified dependents to be added to any plan. In terms of group plans, it is worth noting that the employer has the choice of whether or not to pay for the dependents’ health insurance. Learn more about who qualifies as a dependent for small business health insurance here.
If you run a family business, you should know that your spouse cannot usually count as your one and only employee. If you have other employees, who may also be your family members, your spouse can generally enroll in the group plan.
The Affordable Care Act (ACA) created the small business health care tax credit to provide incentives for small business owners to offer health insurance to their employees.
For eligible small business owners, the government may give you a tax credit to help you pay for your portion of employee premiums. A licensed health insurance agent can help determine if you qualify for a small business health care tax credit.
You will also likely be able to deduct health insurance costs from your taxes as a small business owner. This deduction could help you lower or offset the cost of contributing to your employees’ premiums.
The potential to save money through tax incentives serves as a major advantage for an employer considering getting coverage for his or her small business employees.
There are many reasons to offer small business health insurance, including the cost savings of lower premiums and tax incentives, as well as the long-term benefits of greater employee job satisfaction and the ability to add family members to a plan.
If you decide that a group plan is the right choice for your company, visit eHealth.com to find the best group health insurance plan for your employees, budget, and preferences.
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.