Every growing business should consider offering health insurance to its staff members, but determining the right timing for the change can be tricky.
Offering health insurance too early or with the wrong health partner could mean skyrocketing costs that could cripple a young venture. But releasing it too late (or not at all) could seriously kill morale and motivate previously-dedicated employees to jump ship prematurely.
How should a new business owner navigate these murky waters?
When to offer employees health benefits?
Short answer: A company should offer health insurance as soon as it can.
Long answer: Figuring out when to do it can be seriously complicated. And even though company size (measured by number of employees) isn’t the only factor involved, size does matter — the Affordable Care Act stipulates that a business must offer health insurance once it reaches 50 full-time employees or risk being fined up to $2,000 per uninsured employee.
This number can also be determined by the hours worked for all employees (full and part-time), so be sure to double check if your company qualifies as a large employer in the eyes of the IRS.
Another determinant is by financial viability. For example, the moment when a company can officially afford to offer health benefits in a sustainable way.
This is a huge deal since health insurance represents one of the biggest costs for small and medium-sized businesses. Those costs are not only determined by the type of care an organization selects to provide (from defined contribution health plans to health and flexible spending accounts), but also by the legal provisions their home states have for small and medium-sized enterprises.
To learn more about these, check out Entrepreneur Magazine’s Basics of Employee Benefits article.
Reasons to be proactive, not reactive
Like with any major business decision, the call to offer health insurance is a strategic investment towards an organization’s stability and future growth. Companies that offer health benefits reap incremental rewards.
Job market competitiveness
According to Reuters, “nearly 80 percent of U.S. workers would rather have better health insurance than a pay raise.” This is confirmed by current job market trends. To boost staff retention and attract top-of-the-line talent, employers have to prove that they’re financially invested in their employees’ happiness and well-being in a tangible way.
Happy and healthy employees work harder, faster, and display higher levels of engagement. The Harvard Business review confirms that “highly engaged organizations” are twice as successful as companies displaying lower levels of employee satisfaction and engagement.
Tax advantages and cost savings
In addition to the tax breaks local governments give small and medium-sized companies as a way to incentivize workplace insurance adoption, many savvy startups have banded together to enhance their negotiation power with insurers by way of associations and collectives. These economies of scale make it possible to cut costs without downsizing insurance coverage, proving that growing enterprises can have their employee health benefits cake, and eat too.
The 2020 Open Enrollment Period runs from November 1, 2019 to December 15, 2019.