Everybody might agree that businesses succeed because of their employees. No business will grow without good employees, including those in a managerial position. This keeps the competition of getting the best candidates tougher among different companies within the same industry. Some offer higher compensation, but most of them offer more employee benefits to attract good candidates.
Providing health and life insurance is one way of how employers encourage the top candidates to apply for their openings. For some, this is a way to achieve employee retention, too. To make this possible, business organizations allow some insurance providers to request a health and life insurance drug test, but it’s merely at the employer’s discretion to provide this or not. Employers can also choose what benefit coverage will suit their budget and needs.
There are advantages and disadvantages of providing insurance to employees. If you’re a business owner or a human resources manager still stuck on whether you need to offer insurance to your employees or not, read through this article as it lists down some pros and cons of providing employee insurance.
Why You Should Provide Insurance to Your Employees?
Since providing insurance to your staff can cost a lot, you must know how this will benefit your company as well. This decision is crucial especially if you’re a small business trying to grow your company. Some of the benefits that providing insurance to your employee can give include:
1. It Increases Employee Retention Rate
As a business, they must have employees whose been with the company for years. Employees who’ve enough knowledge of how the company works makes everything easy for the owner. Providing insurance to employees, whether it’s health or life insurance, it’s like giving them confidence, that as long they’re with the company they’re secured. Thus, the company’s retention rate will increase.
2. It Attracts Good Candidates
Most applicants, especially those who know that they team with potentials, might not just settle for a company that doesn’t offer insurance to their employees. Health and life insurance are now one of the important employee benefits that most candidates are looking for. If you’re a company that doesn’t provide them, then that reason is enough for some applicants to remove you from their list of companies to apply to.
3. It Allows Eligibility for Health Care Tax Credit
Health care tax credit applies to small businesses that have less than fifty full-time employees. Unlike large businesses, small employers don’t get penalized for not providing health insurance coverage to their employees. But if they did, they may qualify for a tax credit that’s equivalent to half of the amount they paid for their employee’s health insurance.
4. Insurance Keep Your Employees Healthy
Some health insurance come up with free annual physical exams. Others have rewards programs, as well, whenever employees complete a wellness activity. Thus, despite the rising cost of providing health insurance to employees, they’re believed to help employees stay mentally and physically healthy. This lessens the reasons for them to go on long sick leaves, which will ultimately benefit the company in terms of labor needs.
5. It Provides Relief from the Burden of the No-Coverage Penalty
This applies to large employers whose number of full-time employees is more than fifty. The no-coverage penalty is worth more than two hundred dollars per employee monthly. You can only imagine how much a company needs to pay for it, in case they fail to provide insurance coverage for their employees.
Why Insurance Shouldn’t Be Prioritized for Your Employees?
While the list above includes good things to look forward to once you provide insurance to your employees, it also has disadvantages. Knowing these can get you prepared with countermeasures to prevent or at least lessen the burden of its negative impacts.
1. Rising Cost of Insurance Every Year
The rising cost of insurance is making it difficult for large and small employers to cope with payments. Since the cost of providing insurance is increasing each year, a company needs to consider this as a part of its annual budget, or else, it’ll be impossible for them to sustain the business.
2. Additional Administrative Tasks
When you provide insurance to your employees, you’ll need to work on a lot of things. From having your employees fill out application forms to coordinating with the insurance all the required documents, these will have to be completed by the employer. It can be time-consuming unless you hire someone who’ll take care of everything. This is another cost to consider.
3. Potential Law Suits and Legal Liabilities
There are instances that employees are filing lawsuits against their employers for choosing an incompetent insurance provider, especially with healthcare. Sometimes, the structure on how employees’ benefits were set up can end up in a lawsuit or a regulatory fine.
This is why employers must be careful and take extra effort in providing insurance to their employees. Some employers even hire an employment law attorney to help them set up everything so that every decision they take is compliant with the laws.
Should You or Should You Not Provide Insurance to Your Staff
Providing insurance to your employees can be beneficial to your company in the long run. However, there are also negative things about it as this article has shown above. As an employer, you should be able to take both sides into considerations. Know your company, employees, and the legalities involved, and you’ll come up with a decision that’s best for everyone involved.