For small business owners, attracting and retaining employees is essential. Because of this, many turn to benefits as a way to encourage potential employees to apply and motivate current employees to stay on with the company. Group health insurance is one benefit that most employees expect these days. If you’re a small business owner and you’re on the fence as to whether or not you’d like to offer these benefits to your workers, find out the advantages that both you and your employees will enjoy.
What Is Group Health Insurance?
Also known as employer-sponsored group health insurance, group health insurance is coverage provided by employers to their workforce. While employers do not pay for all expenses related to their employees’ health care, they do pay for a good portion of their premiums, making the insurance more affordable.
How Does It Work?
Unlike individual health insurance plans, group health insurance must be purchased by a group. Businesses can enroll in a group health insurance plan at any time. This gives them flexibility to offer their workers the insurance they need without having to wait until a specific timeframe.
Those invited to participate in group health insurance are not required to sign up. However, an employer must have at least a 70% participation rate in order to obtain and maintain the group health insurance. Employers can decide what type of insurance products are available to their employees, but the most common include health insurance, vision insurance and dental insurance.
Advantages of Group Health Insurance
There are several advantages that come from signing up for a group health insurance plan. Both small businesses and their individual employees may enjoy the following benefits:
1. Lower Cost for Employees
Purchasing health care coverage for individuals can be very expensive. Group health insurance helps to spread out the cost among all of the members in the pool. The more employees you have sign up, the less they’ll have to pay for their coverage. In addition, this can mean better plans available, lower premiums and more coverage.
2. Tax Incentives for Businesses
There are tax incentives for businesses that offer group health insurance. The small business health care credit gives employers a credit back on their taxes which can then be put back towards the payment of plan premiums. From an employer’s perspective, this is likely the biggest advantage. It can help to significantly cut the cost of offering insurance.
3. Cost Savings for Businesses
High employer turnover can cost businesses a lot of money. It takes time and money to advertise, interview and hire new employees. Offering group health insurance as a benefit that attracts and retains workers can be a huge cost savings for businesses of all sizes.
4. Positive Work Environment
A positive work environment in which everyone has good morale is essential to good business. Workers who are worried about getting sick or injured without the ability to pay for their medical care are not going to be happy working for you. Group health insurance is a benefit that shows how much you care about and appreciate your employees.
Small Business Requirements for Group Health Insurance
In order to qualify for group health insurance, a company must have at least one full-time employee on payroll. Independent contractors are not eligible for group health insurance and cannot be included as your total number of employees. If your company has over 50 full-time employees, you will be required to sign up for large group coverage.