Written by: Joe Emerson // May 8, 2020
Last updated: May 8, 2020
If this article had a moral, it would be that giving your employees health insurance coverage is the right thing to do and, ultimately, beneficial for all concerned parties. It’s kind of like A Christmas Carol in that Ebenezer Scrooge opening his heart was a good thing for him that ultimately saved Tiny Tim. There’s no moral here, though, just 5 reasons you should offer health insurance for employees.
5. It’s Pricey, But Maybe Not as Pricey as You Think
Yes, health insurance is pricey. According to the Kaiser Family Foundation (KFF), the average cost of employer-provided health insurance in 2019 was $7,188 for an individual and $20,576 for a family.
Here are some more KFF numbers from 2019 to crunch:
- Among workers with employee-sponsored coverage, the annual share of the tab for premiums on individual coverage was 18 percent, with the percentage climbing to 30 percent for family coverage.
- Coverage percentages vary by company size. Forty-seven percent of companies with three to nine workers offered some degree of coverage. Most companies with 1,000 or more workers offered some form of coverage.
- Overall, 57 percent of companies provided some level of health benefits to employees.
- Fifty-five percent of workers are in employer-sponsored health plans.
- Ninety percent of people work for large companies, and most of those companies offer some level of health care coverage.
If you’re trying to make those percentages add up, remember that a lot of workers are on government insurance plans, and many others simply reject the expense of coverage.
Here’s Why It’s Not as Pricey as You Might Think
With premiums topping $7,000 for individuals and $20,000 for families, where are the savings?
For the insured, there are savings on taxes. The premium costs are deducted before taxes are calculated. On average, that means thousands of tax-free dollars. A discussion on how much the coverage can save on medical expenses would be purely speculative. That speculation could include medical bills topping tens or even hundreds of thousands of dollars.
For the participating employer, there are monetary considerations, too. According to BizFilings.com, companies providing coverage for employees:
- Avoid penalties levied under the Patient Protection and Affordable Care Act over failure to offer coverage to employees.
- Bolster compensation packages and get a tax credit for the outlay. If the business is incorporated, the cost of your insurance as well as your employees’ is deductible.
- Can get a tax credit if they have fewer than 25 employees.
- Can qualify for an additional tax credit if a wellness program is offered, too.
- Can find lower rates by leveraging the purchasing power of a group.
- Can cut annual costs of sick leave, health plans, workers’ compensation, and disability insurance by roughly 25 percent, according to the U.S. Office of Disease Prevention and Health Promotion
For employers offering insurance coverage, there also are savings accrued through improvements in employee recruitment and retention and increased productivity.
4. Recruiting Top Talent Gets a Little Easier
Supplementing employee compensation is a 20th century idea that gained a lot of ground when wage and price controls were instituted during World War II. Wages were frozen, but the freeze did not apply to fringe benefits. Cue employer-funded health insurance coverage. Two other things happened that made that coverage a workplace fixture:
- In the late 1940s, the National Labor Relations Board made employee benefit plans subject to collective bargaining.
- In 1954, the IRS exempted employer-paid health insurance premiums from income tax.
Employersresource.com, in an article on recruitment, equates the value of health care coverage to hiring in a way that doesn’t require a calculator to interpret: “To put it plainly, if you do not offer employee health benefits, or only offer subpar options, you will miss out on great candidates.”
3. Health Care Coverage as an Employee Retention Tool
In a 2018 article, Clutch notes that 55 percent of employees said health insurance is paramount in terms of job satisfaction.
The Hartford, an insurer, agrees that good coverage is a top-shelf retention tool: “Employees are more likely to stay with a company that offers valuable insurance benefits, as they (benefits) can be far more costly to replace on an individual basis.”
2. Offering Health Care Coverage Can Increase Productivity
Blue Shield of California offers these insights on the effects of health care offerings on productivity:
- Health-related absences incur lost productivity costs that exceed the worker’s wage by 28 percent.
- Working at suboptimal levels “accounts for between 20 percent and 60 percent of the total health-related costs faced by employers that can be traced to on-the-job productivity losses.”
Here’s Smallbusiness.chron.com’s take on health insurance and productivity: “A healthy workforce is a more productive workforce. It’s plain and simple. Employees with health insurance are out sick from work fewer days, and continue working. An Australia-based study found that healthy workers were three times more productive than those in poor health.”
Offer health care coverage with a wellness program and the benefits increase, SHRM says.
- Wellness plans that address anxiety issues can take on work-related stress, a top job-related health problem.
- Wellness efforts can curb four of the nation’s most costly (for employers) health conditions, chest pain (angina), high blood pressure, diabetes, and heart attacks.
The U.S. Office of Disease Prevention and Health Promotion notes that worker participation in a health promotion program yielded the equivalent of 10.3 hours of additional productivity per employee annually and saved employers an average of $353 per person in productivity costs.
1. It’s Easier than You Think, and You Can Get Covered, Too
Want to get rolling on health insurance for the employees of your small business? HealthCare.gov is a clearinghouse for information and a starting point to shop coverage.
Thinking bigger? Shop around for an insurance broker or agent. They can:
- Tailor a plan to your business and employees’ needs.
- Shepherd workers through the startup phase, and field questions and offer advice thereafter.
- Keep you plugged in and on track when it comes to regulations.
Turning to the experts always is a good idea. When it comes to professional training, from human resources to project management, the place to turn is the USF division aptly named the Office of Professional Training and Corporate Education.