More and more businesses these days are choosing to offer a group health insurance plan to their employees rather than individual plans. Whilst most people are familiar with the benefits of individual insurance policies, many of us do not have any experience with group health insurance options.
There are many advantages that group plans offer to both employers and employees. This article will aim to explain why a group plan is a cheaper health insurance option for small businesses.
Lower Premium Rates
There are a lot of advantages of group health insurance, but the most immediate one is that it can be significantly cheaper than individual insurance policies. Group plan health insurance rates can be 10-15% less than similar individual products. Employees can pay for any medical treatment that they need and can also ensure that their family members are covered too. You can find a lot of helpful information about the benefits of group health insurance plans which explains the financial assistance that employees are given.
Part of the reason that group plan rates are lower is that the risk is spread over a larger pool, and as your employees are all of working age and health, insurance companies calculate that they are not likely to make a significant number of claims. Employees can save money on everything from extended hospital stays to prescription drugs, while small business owners save money on policy rates.
The second advantage of group health insurance plans is that they often enable small business owners and their employees to save money on taxes. Many group health insurance options are completely tax-free for small businesses. Additionally, as premiums are calculated using employees’ pre-tax incomes, they ultimately end up with more money than if they had an individual insurance plan.
The premiums are tax-deductible for employers whilst still providing all the excellent benefits for their employees. This group policy provides advantages for both the employer and the employees. This is because the employees receive access and coverage for health and dental plans, while the premiums paid by the employer for the benefits are tax-deductible.
In some places, small business owners who provide group insurance to their employees, and pay a portion of their premiums, are eligible to receive a tax credit to cover part of the cost of the plan.
Money Saved from Increased Productivity
A healthy employee is a happy employee and ensuring that your team and their family members are medically protected will create a fantastic atmosphere in the workplace. A good working environment leads to significantly increased productivity. Healthy employees are absent from work less than sick employees and will need fewer checkups or sick days.
One study found that in businesses where employers provided good insurance plans and incentives, productivity increased by 25%. This huge boost in the output should comfortably mitigate the cost of the group plan for the employer. Not only will they get back some of their money through taxes, but they will end up comfortably in profit due to their employees feeling valued and protected.
Money Saved through Employee Retention
Not only are healthy and happy employees more productive and therefore more profitable to a business, but they are also far less likely to leave the business and get a job elsewhere. Training new employees, as well as temporary drops in productivity whilst looking for replacement staff, can have a big impact on the profitability of a small business.
If a small business does need to recruit, it will be far more likely to successfully attract new employees if it offers a good healthcare plan for workers. Most employees expect at least some of their insurance to be taken care of by their employer, so showing when potential employees see that a business’s workforce is well protected, they are far more likely to accept a job.
For small businesses, in particular, the relationship between employer and employee is absolutely key to building and sustaining success. Whilst no employer is legally obligated to provide health insurance plans to their employees, it shows gratitude and respect for their hard work and recognizes their role in helping the business to succeed.
There are many factors for small businesses to consider when deciding whether to offer their employees a group health insurance plan. Some employers may think that they have to choose between their employees’ health and keeping costs down, and small businesses may believe that they simply cannot afford to choose their employees’ health.
But with group insurance plans, the reality is that small businesses can get both. By providing employees with quality group insurance plans, small businesses not only keep their employees healthy and happy, but they can also save money.