Under the Affordable Care Act’s Employer Shared Responsibility Provisions, employers with at least 50 full-time employees (including full-time-equivalent employees) during the preceding calendar year must offer “minimum essential coverage that is ‘affordable’ and that provides ‘minimum value’ to their full-time employees (and their dependents).” However, a number of small businesses don’t meet these qualifications and have the choice as to whether or not to offer healthcare to their employees.
Certainly, this can take a huge chunk out of your profits, so it isn’t an easy decision to make. To help you decide what to do, we reached out to other small business owners to see what factors they used when electing whether or not to offer their employees healthcare.
Here’s what they told us…
Bob Tankel, founder of Tankel Law Group says:
“I operate a small law firm; our size has ranged from 3 people, including me, to over 25 people at the height of the real estate crash and now has 11 people. We have always offered health insurance to our employees (since 1996) paid for 100% by the firm. We do it because it’s the right thing to do. Nobody who works for us should ever be forced to choose whether to eat or pay medical bills.
We’ve had an employee miss 6-8 weeks after a heart attack, and another successfully treated for breast cancer. They would have been financially ruined without insurance and both of them came back to work. The cost is not insubstantial, about $400-$500 per person per month as of the current policy. We feel that it builds loyalty and makes our people happier and more productive, so it pays for itself in less stress and happier team members.”
Marc Prosser, co-founder of Fit Small Business agrees that employees are a major consideration when it comes to offering healthcare, especially if you want top talent:
“We’re a small but growing company, not large enough to be legally required to offer health insurance in the near future. However, the first question many of our job applicants asked was whether or not we offered health insurance. We quickly realized that in order to get the people we wanted to work for us and stay with us, we would have to offer healthcare. Would not offering health insurance hinder our company’s growth? It seemed clear to us that yes, it would.”
Raj Sheth, co-founder and CEO of Recruiterbox has a little different perspective, focusing on how healthcare is important for remote workers:
“When a lot of people think about remote work, they’re thinking about freelancers or hourly employees or virtual assistants. That’s not what we’re doing. This is a full-time, connected, committed team. Nobody is a contractor. Everybody gets full health, vision and dental benefits.
There are more upfront costs when you provide healthcare benefits, of course, but I believe in the long run it pays for itself. By making this commitment to your employees, they’ll be more likely to commit themselves to your business. People need to feel connected to what you’re doing in order for your business to thrive. Demonstrably investing in your employees through benefits is a great way to inspire connection. As a result, all six employees we hired last year are still on our team.“
Trave Harmon, CEO of Triton Technologies provides healthcare to make sure he’s competitive with other companies in his field, but also because he wants to make sure his company is compliant legally:
“Because of our competition offering similar and or better packages, we have to review on a yearly basis, make adjustments, and/or change packages to the demand of the individual and family.
Also, in the state of Massachusetts, insurance is required for any business that has over 10 employees. With the number of employees that we have, we definitely qualify for that and, in order to avoid fines, we offer insurance.”
Karen Port, owner of Mirage Spa & Recreation, Inc. has a more personal reason to offer healthcare to her employees:
“My husband & I both worked for other companies before our store opened. While working, the health insurance was critical to me due to allergies. I was frustrated when the owners of the companies would give themselves better benefits than the staff.
As life progressed, I was diagnosed with a life-long illness so I pick the health insurance based on me, which benefits everyone. I purchase the best one that a small business can get. I have been offered the opportunity to give my staff a lower plan than mine, but I decline since I think it is very valuable.”
Jesse Harrison, CEO of Zeus Lawsuit Funding took a very comprehensive approach and considered a bunch of different factors when deciding whether or not to offer healthcare to employees:
“We weighed the advantages and disadvantages of providing healthcare to our employees and, at the end, the advantages outweighed the disadvantages so we decided to provide it.
The major disadvantage is the cost. The costs of medical care keep rising and the company is responsible for these costs. More cost means less profit. In addition, the costs can be unpredictable. We don’t know how much it will be until it happens, making it difficult to know how much resources to allocate to it.
It is also tedious and time-consuming to study all the available plans, choose the right one, and fill out all the forms.
The advantages of providing healthcare: There are tax advantages. We can get deductions and tax credits for purchasing health insurance.
Also, employees are better taken care of, and they are healthier. When they need to go to the doctor, they won’t delay it due to cost concerns.
Healthier employees means happier employees. In my experience, happier employees are more loyal to the company.
In addition, many highly qualified employees tend to look at the whole package they are receiving before accepting a job. When the package includes health insurance, they are more likely to be accepting of a lower salary.
We believe the advantages outweigh the disadvantages and that’s why our firm offers health benefits to our employees.”
Based on these responses, it appears that a large number of small business owners opt to provide healthcare to their employees, primarily to attract and retain top talent, but also to gain some tax advantage and avoid fines. And sometimes it is their own personal experiences which have come into play when making this decision.
What are your thoughts? Are there other factors you consider when it comes to offering health insurance to your employees?
I’d love to hear them, so feel free to comment below!
I’m always interested in learning other small business owners’ thoughts on relevant topics and issues, so if you have a comment or unique article idea, feel free to contact me at [email protected] (put “Businessing Magazine” in the subject line, please). If I use it, it’s a free link to your website!