No doubt you’ve read – or experienced first-hand – the “Great Resignation” with millions of workers leaving their jobs in 2021 and 2022. It’s a phenomenon affecting private employers as well as state and local governments. (CNBC reported last month that around four million workers quit their jobs between July and November 2021.) However, in a competitive talent marketplace, employee benefits can make the difference.
Consider the following 11 reasons why you should offer employee benefits.
1. Employee retention
The right employee benefits package can help you keep your current employees. MetLife’s 19th Annual U.S. Employee Benefits Trends Study 2021 found nearly all employees put health insurance at the top of their benefits list. Ninety-five percent consider it a “must have” and another 10% say it’s a “nice to have” benefit.
2. Attract the most qualified employees
In today’s environment, employee benefits can help set you apart from other employers. You can tip the scale in your favor for recruits weighing multiple job offers. According to Fractl, when employees are choosing between a high-paying job and a lower-paying job with better benefits, a majority (88%) will give “some consideration” (34%) or “heavy consideration” (54%) to the firm offering better benefits.
3. Benefits boost employee satisfaction
The Society for Human Resource Management (SHRM) says benefits are big contributors to employees’ job satisfaction, year after year. The only compensation package items considered more important by a majority of employees are pay and paid time off.
4. The pandemic has increased the value and need to have health coverage
The COVID-19 pandemic has prompted many persons to reconsider what they view as important. Health insurance continues to rank high for employees and their families. Multiple employee surveys put health insurance among the most sought-after employee benefits.
5. Save money on your business taxes
Employers can generally deduct 100% of the cost of premiums paid for health insurance for employees and/or dependents. This applies to both federal and state income taxes.
6. Avoid paying Affordable Care Act (ACA) penalty for qualified employers
If you have 50 or more full-time employees, including full-time equivalents, you are subject to ACA’s Applicable Large Employer (ALE) guidelines. That means you are required to offer health insurance to qualified employees. If you do not offer coverage, you are subject to ACA penalties. (If you are not sure if your business is an ALE, visit the IRS website to learn more.) By offering coverage to at least 95% of full-time employees and their dependents, you can avoid ALE penalties. The 2022 “pay or play” penalty is $2,750 for each full-time employee minus the first 30. For example, an employer with 100 employees would be assessed $192,500 (100 – 30 = 70 x $2,750 = $192,000).
If coverage is not “affordable” by ACA standards, or your plan does not cover at least 60% of the total allowed cost of benefits under the plan, a penalty may also apply. Affordability comes into play if the premium is more than 9.61% of the employee’s annual household income for single-only coverage in 2022. Link to a 2021 article published by SHRM for details.
7. Get the small business health tax credit for qualified employers
Depending on your source for health insurance benefits for your business, you may qualify for the federal government’s Small Business Health Care Tax Credit. This could be worth up to 50% of the costs you pay for employees’ premiums (or 35% if your business is a non-profit).
To claim the Small Business Health Care Tax Credit as a California employer, you must enroll in a Small Business Health Options Program (SHOP) plan offered through Covered California, and:
- You must have fewer than 25 full-time equivalent (FTE) employees.
- Your average employee salary is about $56,000 per year or less.
- You pay at least 50% of your full-time employees’ premium costs.
- You offer SHOP coverage to all full-time employees. (To qualify for the tax credit, you do not have to offer coverage to dependents or employees working fewer than 30 hours per week.)
8. Protect the overall wellness of your employees with additional wellness programs
In addition to delivering outstanding health insurance to your employees, when you offer CaliforniaChoice, employees can take advantage of added wellness benefits. These are available through the ChooseHealthyTM program, with discounts of up to 57% on Garmin, Vitamix, and Fitbit products, fitness memberships for $25 a month plus additional benefits like Dental, Vision, Hearing Services, and more in the CaliforniaChoice Member Value Suite.
9. Build a healthy company culture
Offering a comprehensive benefits program shows your employees you value their well-being and their health. Moreover, healthier employees are more productive, which contributes positively to your company’s bottom line.
10. Help employees reduce their costs of health insurance
Comprehensive group health premiums are typically lower than individual health insurance premiums. That’s true even when employees are sharing the cost with their employers. Your decision to offer CaliforniaChoice (or another benefits program) means a lower insurance cost to your employees.
11. Tax break for employees
Employee benefits are not taxable to your employees. Because employees pay only a portion of their health insurance premiums (often at lower rates – as mentioned above), they save on their premiums, are able to pay their share with pre-tax dollars (with a Premium Only Plan), and have more funds left in their paychecks.
Talk With a Broker to Learn More
To find out more about the employee benefits available to your business and your employees, talk with a broker. If you don’t have a broker, we can help you find one who can provide you with a custom quote at no cost.
