Providing health insurance to employees is not always an easy task. However, in today’s competitive job market, you will not be able to attract or retain talent unless you offer sufficient benefits. It is important that you review your options and pick a strategy that works best for your business.
This is the best known form of health insurance for employers and the most comprehensive. Premium costs are split between you as an employer and your employees, which is the most prominent benefit of setting up a group insurance plan. Not only are employer contributions tax deductible, but in most instances employees can contribute with their pre-tax income, increasing their total take home salary. Employers should also check with government tax credits for smaller businesses to offset the cost of insurance.
Large employers with many employees tend to have low loss ratios, which means they can negotiate better health insurance premiums. Insurers gladly deal in group insurance because they hedge the risk of adverse selection. This is because when insurance brokers sell to a large group, no matter their level of health, they are less likely to have to pay for expensive procedures.
Employer Paid Insurance
The next most popular insurance strategy is employer paid insurance. Unlike group insurance, employees pick an individual plan and the employer reimburses part of the costs. Employers will then allot a fixed contribution each month for each individual employee. This set up is usually through an online program.
Employees will be reimbursed through their payroll. For employers, this model is beneficial in cost predictability and is overall less expensive than group insurance. This will also allow your employees to chose plans that best fit their needs. Employer paid insurance is most popular with mid to small size businesses who want to be competitive with their benefits package, but cannot offer group coverage. The downside to this is that the total coverage may not be as extensive, compared to a group insurance plan.
Benefits of Offering Insurance
You expect a return on all business expenses, so investing in a comprehensive health insurance plan will have many benefits. As mentioned above, offering competitive benefits will help your business, no matter how small, to attract top-tier talent.
Employers can offer security to their employees by allowing them to better focus on their work rather than worrying about medical expenses. An insurance plan also ensures that employees have speedy recovery to illnesses or injuries. Overall, health insurance can give your employees security and contributes to a positive work environment.