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.
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.
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.
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