Building A Healthy Business

Providing employee health care coverage brings a wealth of advantages to your business.

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Health care, its costs, and how it gets covered all continue to be in the news. With the implementation of the federal Affordable Care Act, more employers are now required to provide a certain level of health coverage for employees.

Small businesses with 50 or fewer employees don’t face the same mandate. Many may see it as beyond their ability to afford. But you might want to think twice about that. Even if you don’t have to provide coverage, there are good reasons to consider offering health benefits. The good news, experts say, is that it’s possible to do so and still continue to grow and thrive as a business.

Big companies offer health care coverage not just because they can afford it, but because it helps them hire and keep workers. Small businesses might do well to think about it for that reason alone.

“Because health care coverage is a highly-prized benefit, offering coverage will make you an employer of choice, easing the recruitment of future talent and ensuring the retention of key talent,” says Julie Stich, director of research at the International Foundation of Employee Benefit Plans. The organization, based in Wisconsin, conducts research and advises employers on benefit trends and practices.

“Providing coverage will help you maintain and increase employee satisfaction and loyalty, enhancing the employer-employee bond and leading employees to a greater sense of appreciation, purpose, engagement and productivity,” Stich says.

All those may be a bit challenging to quantify. But there are also some more concrete benefits.

People who have health insurance have access to free preventive care, Stich points out. “This can lead to lower rates of absenteeism, presenteeism and disability.”

(Presenteeism? That means coming to work when you’re sick and should stay home to get healthy faster.)

As you probably know, if you don’t cover your employees, they will now be required under the federal law to obtain health insurance themselves. Lower- and moderate-income people qualify for federal subsidies that help offset the cost, but if you have some highly paid employees, they won’t get those same subsidies when they go shopping for health insurance.

“Providing coverage may protect them from exorbitant health costs they may encounter” when they have to buy their own coverage, Stich adds.

There’s no question that offering benefits will cost you in the short run. And even if you get a good deal from an insurer in the first year, you may understandably worry about your costs going up substantially in future years.

Even so, there are important financial benefits to offset those costs. And there are strategies to help you reduce year-to-year increases in costs.

“Offering coverage provides employers with tax advantages in the form of deductions and potential small-business tax credits,” says Stich.

Deductions and credits are two different things, and you benefit from them in different ways. Tax deductions lower your tax burden indirectly: They reduce the amount of personal or business income that is taxed. But tax credits actually reduce your tax itself, dollar for dollar by the amount of the credit.

Small businesses that pay health insurance premiums for their workers qualify for a federal tax credit on a sliding scale, and starting with 2014, the maximum credit increased to up to 50 percent of the amount the business paid out in health insurance premiums.

To be eligible for the credit, an employer must have fewer than 25 full-time-equivalent employees; their average salaries must be less than $50,000 (a number that will be adjusted year to year for inflation); and you must cover at least half of the employee-only health coverage. Finally, you must shop for insurance for your employees through the SHOP Marketplace – state health insurance marketplaces set up similarly to the individual health insurance marketplaces that were created under the federal law. (SHOP stands for “Small Business Health Options Program.”)

You can see what’s available in health plans for your employees at the SHOP Marketplace for your state by going to www.healthcare.gov/small-businesses. Information about the SHOP Marketplace is at www.healthcare.gov/what-is-the-shop-marketplace.

You can learn more about the tax credit at www.irs.gov/uac/

Small-Business-Health-Care-Tax-Credit-for-Small-Employers. The organization Small Business Majority has a calculator here to help you ballpark the likely credit for your business, but remember that’s only an estimate: http://healthcoverageguide.org/helpful-tools/small-business-health-insurance-premium-tax-credit-calculator.

Ultimately, it will be your decision as to whether to offer health insurance for your employees or not.

Stich says you may find another benefit as well though.

“It fosters a culture of health in a company,” she says. “It can potentially reduce employee stress over a lack of health insurance, too-high out-of-pocket health costs and the need to seek appropriate coverage on their own for themselves and their families.”

In short, it gives your employees peace of mind. And that’s a benefit that can pay off long term.



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