Employer-sponsored health insurance is one of an employer’s most important benefits. Health insurance is something that everyone should have. But, it can be expensive for many people to pay out-of-pocket.
Employer-sponsored allows employees to opt-in to have an affordable insurance option. Offering this benefit will not only help with medical expenses. It will also raise morale.
Approximately half of Americans take advantage of employer-sponsored health insurance. Most large and some small companies provide health insurance for their employees.
As an employer, offering attractive benefits can help you attract and keep employees. It will also increase the productivity and retention of employees.
In the following article, we will look at employer-sponsored health insurance. We will explain what it is and why you should provide this benefit to your employees. Let’s go over the benefits to you for providing employer-sponsored health insurance.
What is Employer-Sponsored Health Insurance?
Employer-sponsored health insurance is the most common way that Americans get health insurance. A person’s employer provides options for them to get health insurance. Most employers offer this benefit to both current and retired employees.
Law allows former employees to stay on employer-sponsored health insurance for a time. The employee usually pays this out-of-pocket if they leave the company.
Employer-sponsored health insurance gets offered to employees and their dependents. Also known as group healthcare plans, these plans can help reduce healthcare costs. You want many employees to sign up for employer-sponsored health coverage. This plan means the cost of premiums usually gets lowered.
Do Employers Have to Provide Health Insurance?
For years many employers have provided some form of health care for their employees. The physical well-being of your employees correlates to productivity and job satisfaction.
Most Americans must maintain a small level of health care under Federal law. The Affordable Care Act outlines the requirements to provide employer-sponsored health insurance.
You must provide health insurance if you have at least fifty full-time employees. Failure to do so can result in severe tax penalties and fines.
Healthcare costs have risen over the years. Many employers have looked at ways to make them affordable. You want to cut costs. You also want to provide the best employer-sponsored health insurance possible. Cosmo Insurance Agency can help.
Even if employees still need to sign up for the plans, you are still required to offer the benefit. Providing quality plans will increase the chance of employee opt-in.
Employer-Sponsored vs. Individual Health Insurance
There are similarities between employer-sponsored and individual health insurance. For instance, both insurance types will cover pre-existing conditions. Employees can enjoy a certain level of health insurance for each plan.
Some people may choose private insurance plans, which the employee determines. These plans can offer more flexibility in choosing doctors and hospitals. Private insurance plans can also get carried over to new employers.
A drawback to individual health insurance is access to specific options.
Some individual plans do not cover chiropractors or mental health services. Many employer-sponsored health insurance plans offer opportunities for these extra services.
One of the significant differences between the two types of plans is cost. The average price of insurance continues to increase over the years. As a result, many people are looking for the cheapest options to save them money. Individual insurance plans seem more reasonable. Yet, employer-sponsored insurance plans can save you more money in the long run.
The cost of employer-sponsored health insurance can be more expensive. But, the employer and employees share the cost of the premiums. This method makes it cheaper for individuals. The more people that buy into the group insurance plan, the lower everyone’s premiums are.
Employees also will receive more perks with employer-sponsored health insurance. The tax advantages for the employer make offering health insurance a great benefit.
Benefits of Employer-Sponsored Health Insurance
There are many benefits to providing employer-sponsored health insurance.
It can be a benefit for business owners. These benefits apply to both employers and employees.
Benefits for Employers
Other than the fact that it is the law, offering health insurance to your employees can be a benefit to you as well.
Attract better talent. The best people for the job will get drawn to employers who take care of their people. Offering insurance perks will make your business more competitive in the job market.
Tax-deductible premiums. Employer-sponsored health insurance is also tax deductible. You can claim your premium payments during tax time. As a result, you stand to save thousands of dollars every year.
Increased productivity. Productivity correlates to well-being and personal health. By providing health insurance, you will make your workforce more productive.
You can also lower insurance costs. Insurance companies offer lower premium payments with more people enrolled in a plan. Having the risk spread among a large pool of employees will mean lower prices.
Benefits for Employees
Healthcare costs continue to rise. Minimizing the out-of-pocket cost can be very important. Enrolling in employer-sponsored health insurance is also an excellent benefit for employees.
Affordable healthcare. Finding affordable healthcare can be difficult for individuals. Offering healthcare to your employees gives them access to services otherwise.
Treatment of chronic diseases. Many people suffer from chronic issues and may need rehabilitation or mental health help. These services may not be available from cheaper insurance options.
Improved morale. A generally happy workforce is more productive. When employees are healthier, they are more optimistic. Also, employees are more likely to stay with their employer when they are happy and healthy.
Employers research for you. Finding the best insurance provider can take time and effort. With group insurance plans, the employer chooses the plan options for their employees. This move saves the employee time and energy in finding the perfect plan.
Lowered taxable income. Premium contributions by your employer are not subject to federal taxes. Employee contributions can be pre-taxed, which reduces your taxable income.
Three Common Types of Employer-Sponsored Health Insurance
There are several standard health insurance coverage options for small businesses. They each have their pros and cons. You can decide on which one best fits your business model.
Small Group Health Insurance
Small-group health insurance is one of the most popular options. You must have between two and fifty employees to be eligible for this coverage.
The best benefit to this type of coverage is cost-sharing. The employer and the employees share the cost of the premiums. This method allows for lower costs for both parties and better benefits.
The downside of this coverage is that it is often a one-size-fits-all model. Also, much of the cost gets placed on the employer, which can burden small business owners.
Health Reimbursement Arrangements (HRAs)
HRAs reimburse employees for out-of-pocket medical expenses or health premiums. This benefits employers, as it allows them to set the budget. The employer sets aside a monthly allowance of tax-free money. Their employees have access to reimbursements.
HRAs are easy to set up and manage. And most vital, they are affordable. Also, if your employee does not use the allotted funds by the end of the year, your organization can keep the money. This plan can be a huge benefit for managing your budget.
One drawback to HRAs is that your employees may need to be more familiar with these plans. You will need to educate your team on how these plans work. They will also need to know what expenses qualify. You will also need to inform them where they can seek individual coverage.
A health stipend allows you to offer a monthly allowance for health expenses. These usually get dispersed through an expense plan. While this method works as a taxable bonus, it helps ensure they use the funds for medical needs.
This plan is an excellent option for smaller businesses. You can benefit employees without the restrictions of a group plan or HRA. Since these are informal benefits, they are customizable. These stipends are also helpful if you have 1099 contract employees.
A downside to stipends is that employees may not see them as a benefit of other options. You can only make employees submit proof or receipts with HRAs. Also, since it is an informal benefit, you will not be eligible for tax credits.
These stipends may work in some situations. If you have a lot of contract employees, this may be an excellent option to provide benefits.
Help in Choosing Your Employer-Sponsored Health Insurance
Employer-sponsored health insurance is a significant benefit to offer your employees. Depending on the size and type of your business, you may need to provide these benefits by law.
Cosmo Insurance Agency can help you find your business’s best health insurance plan. We will help you choose a benefit package for your employees. We will find a package that is both cost-efficient and beneficial to your employees. Let us help you find the best employer-sponsored health insurance plan for you.