Group health insurance refers to a single policy issued to a group covering all eligible employees and sometimes their dependents. Small businesses are not required to provide health insurance by law, but it is recommended to ensure employees have access to health coverage.
Large companies must offer coverage under the Affordable Care Act (ACA) and may face penalties if they do not provide coverage. If a business is considering offering group health insurance, it is essential to understand the many benefits that a policy can provide to both employers and employees.
Cost Savings
One of the most significant advantages of group health insurance is cost savings. Group health insurance is generally less expensive than purchasing an individual health insurance plan.
Due to the larger number of people included under a single policy, the associated risks are spread out among multiple plan participants, resulting in a more affordable policy. When insurance premiums are too high, no one benefits.
With group health insurance, employers can provide employees and their dependents with affordable health insurance while also enjoying savings themselves.
Tax Incentives
Employers can enjoy a range of tax benefits when choosing to provide their employees with insurance. A group health insurance policy can reduce an employer’s tax liability by leveraging a small business healthcare tax credit.
This hefty credit is offered to small businesses that provide workers with insurance and pay for a percentage of their premiums. Most expenses that an employer incurs due to health insurance for employees and dependents are 100 percent tax-deductible as a standard business expense on both federal and state income taxes.
Employee Satisfaction
Another significant advantage of having group health insurance relates to employee satisfaction. Employees that have access to affordable health insurance are generally happier and healthier than employees that do not have proper health care coverage.
When an employer offers insurance, employees are usually more appreciative of their job. They are more likely to build a career at their company and feel valued by their employer. Happy employees lead to a more positive work environment and stronger employer-employee relationships.
Recruitment & Retention
Providing employees with insurance not only results in greater satisfaction but also employee retention. Employees are more likely to remain at their job if they receive the benefits they need for good health and wellness.
Group health insurance is also an important component of any comprehensive employee benefits package. Job candidates understand the importance of benefits and often pass on a job that does not provide health coverage. Offering an insurance plan can act as a recruitment tool to bring on new talent.
Employee Convenience
Several key benefits directly impact employees. The peace of mind that comes with knowing they are protected by an insurance plan from their employer without having to go out of their way to get coverage is going to make a big difference.
Compliance
Another important reason to offer insurance to employees is to remain in compliance with federal law.
Businesses with more than 50 full-time equivalents (FTE) employees are legally required to provide eligible employees with health insurance coverage. Under the ACA, large companies that do not offer these benefits could face a hefty penalty per employee.
There may be other reasons why a business would be required to offer insurance in addition to the above ACA guideline. For example, employment contracts and union agreements often require businesses to offer health coverage. Businesses offering health insurance to one FTE employee must offer it to all eligible employees.
Should a Business Offer Group Health Insurance?
If a business is not legally required to offer insurance, should it? For the majority of businesses, the answer is yes.
Group health insurance can benefit both employers and employees and is often deemed a more affordable alternative to solutions like Health Reimbursement Arrangements (HRAs). Providing insurance coverage also shows employees that they are respected and appreciated.
Request More Information About Group Health Insurance
Today, many employees prioritize health insurance over other benefits, including salary. Offering group health care benefits can provide businesses with a competitive advantage and help keep current employees satisfied.
For more information about the advantages of a group health insurance policy or to speak with an insurance expert about acquiring an insurance policy for a business, reach out to New City Insurance today.