Employers with fewer than 50 full-time equivalent employees (FTE)* are not required to offer group health insurance, but since six out of ten employees rate health benefits as a very important contributor to job satisfaction, you may want to consider offering it.1
Offering group health coverage suggests to employees they're important to your business and that you care about their health. Here are a few ways group benefits can help tip the scales for small companies.
Benefits are vital for attracting the right talent to your company and keeping it there — and that’s especially important when you consider that employers typically spend about a fifth of an employee's salary to replace a worker who leaves.2 So for an employee earning $50,000 a year, it costs about $10,000 to replace him, versus an average annual health premium of $6,435 (of which the employee typically pays a portion).3
When companies do not offer group insurance, employees often look for a higher salary. But many small business owners overlook that contributing to employee health insurance can be potentially more cost-effective than raising an employee's salary. Why? Health insurance contributions are tax-deductible to the employer and tax-exempt for the employee. Plus, consider that 79 percent of workers would choose new or additional benefits over a pay raise.4
When workers are worried about how they're going to pay for things or handle a medical problem, they're stressed and distracted. Highly stressed employees are less engaged, less productive, and are absent from work more than those who aren't stressed.5 Having health benefits can help workers prioritize their health, keeping them well, and on the job.
If group health coverage doesn't work for your business, another option is to put money into an employee Flexible Spending Account, or FSA. An FSA works with any kind of health plan—even one that's not offered through your company. And now, $500 of FSA money can be carried over to the following year; anything over $500 reverts to the employer.6 So even if you don't offer health coverage, this can go a long way toward showing that you appreciate your workers.
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(*) FTEs are a calculation of how many workers together equal a full-time employee working 30 hours a week or more. Businesses can calculate their FTEs here.
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