Benefits pack a big punch. They show that you truly care about your team’s well-being and success — both inside and outside the workplace. And when you’re just getting started, deciding whether to go with group insurance is one of the first choices you’ll have to make. Luckily, you’ve landed in the right place. This article will break down the main benefits of group health plans, so you can make an informed decision for your team.
How do companies think about benefits?
Let’s first lay out how employers think about the entire benefits process. The Guardian Workplace Benefits Study found that companies view offering health insurance through three vantage points:
- Saving as much as possible
- Doing everything they can for their employees
- Striking a balance between the two
Around one in three companies care more about cost, while one in four are more focused on the value it provides to their team. And 40 percent believe it should be a healthy mix of both.
This is the central reason group health plans are so great — they allow you to find that magical equilibrium. Company-sponsored insurance allows you to be kind to both your balance sheet and your employees’ health care needs. Here’s how:
1. It helps you attract awesome people
It goes without saying that providing health benefits gives you a competitive edge. But with group plans, that edge is even more pronounced. To start, it helps you establish a culture where people don’t have to stress about their insurance needs. When someone new joins, the last thing they should do is get lost in the health care jungle. With group coverage, employees can enroll when they’re hired, which saves them from having to worry about the rigorous process of researching, buying, and maintaining their own individual plans.
2. It helps you retain awesome people
It also does double duty in terms of retention. Considering that replacing a teammate can cost you over half of their yearly salary, this is extremely important, especially for smaller companies who can’t afford the tumult of turnover. Guardian Life found that 80 percent of workers say a comprehensive benefits package is one of the main things that influences whether they stay at their current company. Employers prize the same exact thing. Four out of five companies surveyed by MetLife said that retaining employees is one of their top goals when offering health insurance.
3. It’s good for your wallet
Going the group route is also your secret weapon when it comes to lowering costs. Since your contributions are a business expense, they’re tax deductible. Additionally, the amount your team pays toward their premiums is done on a pre-tax basis, which means that they have lower taxable payroll earnings, so your payroll taxes are lower.
Section 125 plans are another bonus of group health coverage. These plans allow your employees to choose from an array of benefits before taxes are taken out. The simplest kind is called a POP plan, or premium-only plan, and it can save you a significant sum of money. Let’s say you have a ten-person company where the average person makes $40,000. With a POP plan, you could see as much as $1,836* a year in savings.
4. It’s good for your employees’ wallets
Group plans also help your team get the most bang for their bucks. Employee contributions to premiums are deducted from their wages before taxes, which then decreases their overall taxable income. By their very nature, benefits give people more control over their finances. In fact, half of employees polled by MetLife said that benefits prevented them from worrying about their financial future and overall health.
Your team can also save through POP plans. If an employee works at a ten-person company and makes $40,000 a year, they could set aside an extra $744** every year.
5. It builds community
Group plans reinforce the feeling of community because everyone is united under the same plan. Employers demonstrate that they’re invested in everyone’s happiness and long-term health, and that goodness ripples throughout the entire organization. This is also ingrained in the fact that each new hire gets access to coverage when they start.
Another key part of group insurance is the shared knowledge and resources. When done well, group benefits create an environment where access to health details is centralized, so people know exactly where to go for help. With so much confusion involved with understanding health insurance, this aspect is paramount. If employees feel overwhelmed, they may not make the right decision for their needs or utilize their coverage in the correct way.
There’s a lot that goes into launching a benefits program. It can feel confusing at first, but with the right knowledge, it will get way easier. And soon enough, you’ll be able to snag a plan that gives you and your team exactly what you need.
*Based on 6.2% Social Security and 1.45% Medicare taxes, no state taxes included.
**Based on 25% federal income and 6% state Income taxes.