This article was updated on June 28, 2018.
Offering health benefits to your employees can play a major role in your overall recruitment and retention strategy. In a 2014 survey conducted by ADP® and KRC Research, 51 percent of small business employees rated health insurance as the benefit they value most. The decision whether to provide this particular benefit has taken on a new urgency, as many of the nation's top health insurance carriers (such as Aetna, UnitedHealthcare and Humana) are either reducing participation in or withdrawing altogether from the Affordable Care Act health exchanges across the country, according to The New York Times.
"As more carriers distance themselves from the exchange, businesses should be aware of the potential impact it could have on their employees' individual coverage," explains Janine LaMorte, ADP senior division vice president, Insurance Services Sales. "This could be an ideal time for employers to consider other group health benefits options."
Explore Your Options
Many small businesses are turning to companies with access to hundreds of insurance carriers in order to offer their employees health insurance benefits. These companies assist in selecting the right plan for an individual business, from high-deductible and cafeteria plans to customized individual plans.
Currently, the Premium Only Plan (POP) is gaining more favorable attention among small businesses. An IRS-approved POP allows employees to pay part of their health insurance premiums with pretax dollars. Eligible premiums typically include health, dental, vision, disability and life insurance. For business owners, this translates into lower payroll tax expenses and reduced Social Security and Medicare expenses; for employees, there's reduced taxable income and more take-home pay. Establishing a POP can make your benefits plan more competitive, allowing you to create lasting value for your workforce, while at the same time generating continuous tax savings for your business.
Since health coverage is such a major business expense, the structure and availability of employee benefits will continue to be a major topic of concern for employers. Finding creative ways to offer a competitive (and affordable) health plan can make the difference between hiring the employees you really want and losing them to the competition.
Know the Open Enrollment Dates for Your Health Insurance Plan
Employees must renew their membership in an exchange, if that's what they choose to do. By exploring different options (such as opting out of exchanges altogether), you could be in a much better position when it comes time for your plan's open enrollment period. You may even be able to save a considerable amount of money in the process.
Overall, it's clear that your benefits plan can play a large role in employee engagement and retention. "When employees consider a job opportunity, health benefits continue to be one of the critical considerations," notes LaMorte. "With so many health packages available, employers should explore which option works best for their business."
For more information on offering health benefits, check out Health & Benefits Coverage 101.
Visit and subscribe to ADP's "Eye on Washington" for the latest on Health Care Reform and other regulations impacting employers: https://www.adp.com/tools-and-resources/adp-research-institute/research-topics/legislative-updates.aspx
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