Are You Prepared to Offer Health Insurance? Part 1: First, consider the ALL of the costs – Brigade Bookkeeping

Have you thought about offering employee health insurance? If you have fewer than 50 full-time employees, you are not required to offer coverage, but you can gain a competitive edge with top job candidates if you do.

Clients often ask me about offering health insurance to their team. They want to know if their business is required to offer specific benefits. They want to know what it will cost. But, perhaps most importantly, they want make a decision that keeps their team healthy and happy. If you are also wrestling with these questions, I’ve mapped out some answers for you.

Am I required to offer health insurance?

If you meet the definition of an applicable large employer (ALE) — any business employing a combination of 50 or more full-time-equivalent (FTE) employees during six months or more of 2018 — then you are required to provide a certain percentage of your FTE employees with minimum essential coverage (MEC). Small businesses that don’t meet the definition of an ALE do not have to offer health insurance coverage.

If my business is not an ALE, why would I offer coverage?

Small business owners can find the cost to be the biggest challenge, and will opt not to offer coverage since it is not required. On the other hand, can you “afford” to lose out on top talent?

• According to a 2016 SHRM survey of the most important benefits to employees, Health Care benefits came out on top. About 95% surveyed put them above Retirement Savings Plans (71%) and Family Leave (50%).
• A 2017 Fractl survey of 2,000 U.S. workers revealed that when given a choice between a job with higher pay or one with lower pay but better benefits, 88% would consider the lower paying job if it meant they would receive better health, dental and vision coverage.
• According to a 2016 Paychex survey on employee retention, 26% of employees have left a job due to unavailable or unaffordable health insurance.

Candidates and employees see health insurance as a deciding factor when it comes to either joining, or staying at a company. When you add up what’s lost from turnover, increased hiring costs, and lost productivity, the cost of not offering health insurance can be considerable.

What costs should you prepare for?

Brigade Bookkeeping can help you look at costs considerations you’ll want to address. This can include:

1. How will you budget for the costs of offering health insurance?
2. How can you manage healthcare spending?
3. Are you eligible for small business tax credits?
4. What are the costs in time and manpower associated with setting up and administering the plan?

After we’ve reviewed costs, you will want the assistance of a licensed agent to help you with plan choices that are best for your business. In the next edition of our blog, I’ll preview for you some of the likely options you will be offered and why they are popular.

Additional Sources:
“How much does not offering health benefits cost my business?” by Caitlin Bronson, 5/30/17
“5 Awesome Job Benefits That Attract Quality Candidates” by Marielle Leon, 11/29/17
“What are my employer health insurance requirements as a small business in 2019?” by Caitlin Bronson, 2/28/19