If you're a small employer, offering health insurance to your employees may contribute to a stronger business. Health benefits don't just improve health outcomes for your employees; making them available can also lead to a happier, more committed and more productive workforce. Consider these three scenarios to help guide your decision.

Attract and retain good workers

In a competitive job market, offering benefits can be a great way to both draw and keep great employees. In fact, employees consider health insurance more important than any other benefit1 and 88% of employees would give "some" or "heavy" consideration to better health, vision and dental insurance when choosing between a high-paying job and a lower-paying job with better benefits2.

If your business relies on highly skilled workers who are in great demand, employer-sponsored insurance is an important competitive benefit. These workers are hard to find, and once you spend your resources hiring and training them, you don't want to risk losing them. Replacement costs are high: On average, employers pay about 33% of a departing employee's salary in order to replace him or her, according to a Work Institute study3.

Improve productivity and morale

When workers without health insurance are sick, they often avoid going to the doctor. As a result, they suffer through illness, and their work lags as they try to muddle through. As colleagues step in to pick up the slack, employee morale can deteriorate. That can cost companies valuable time and money. 4

When employees have health coverage, business owners can enjoy peace of mind, knowing that sick workers can access the care they need to get back to the job.

Reach the two-year milestone

While there’s no hard and fast rule for when a small business can offer benefits to its employees, according to Antara Dutta, a mentor for SCORE, a small business counseling organization, experts often recommend a company be in business for a minimum of two to three years before adding group benefits. This gives a small business owner time to establish the business as well as get an idea of his annual profits before adding a large outlay.

Employer-sponsored coverage might not make sense for all small businesses, but for some, it can offer a significant competitive advantage. Making a decision to offer health benefits requires a careful assessment of the needs of both your business and your employees. And don't forget to factor in intangibles—offering insurance will be seen by employees as good will on your part, even if they ultimately decide not to take advantage of it.


  1. "The Most Desirable Employee Benefits," Harvard Business Review; February 15, 2017. https://hbr.org/2017/02/the-most-desirable-employee-benefits , opens new window
  2. "The Cost of Employee Happiness," Fractl.com, 2016, http://www.frac.tl/employee-benefits-study/ , opens new window
  3. "Study: Turnover Costs Employers $15,000 Per Worker," HR Dive; August 11, 2017. https://www.hrdive.com/news/study-turnover-costs-employers-15000-per-worker/449142/ , opens new window
  4. “Healthy Workforce” CDC Foundation, 2018, https://www.cdcfoundation.org/businesspulse/healthy-workforce-infographic , opens new window

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