Which group benefits work for your small business?

Which Group Benefits Work For Your Small Business?

Posted March 24, 2016 by Justworks in Benefits and Perks
When it comes to employee insurance for your small business, group benefits are the way to go. Read on to find which work best for your company.

Whether you have a long runway or have taken out loans to start your company, you know that every dollar counts when it comes to business expenses. In fact, a Bank of America survey deduced that 72% of small business owners are concerned about healthcare costs.

That’s one reason of many why accessing benefits for your small business can feel so anxiety inducing. Maybe you’ve asked yourself if you can afford it. The question, however, should be can you afford not to?

Employee Insurance 101

Why It’s Risky to Skimp on Benefits

According to a survey conducted by Glassdoor in 2015, 79% of employees would prefer new or additional benefits to a pay raise. Perhaps that’s because many workers at companies with 100 employees or less don’t even have access to health care sponsored by their employers.

So, why is it such a big deal to offer benefits? Here are just a few reasons:

             <ul> 
              <li><strong>Competition</strong></li> 
             </ul> <p><span style="font-weight: 400;">If you want to attract and retain the best talent, you need to include employee benefits on the menu to be considered by desirable candidates. Whether you offer benefits a la carte (</span><a href="/blog/know-basics-what-fsa-account-how-set-one-up.html"><span style="font-weight: 400;">like FSA’s</span></a><span style="font-weight: 400;">) or with a cherry on top (</span><span style="font-weight: 400;">benefits </span><i><span style="font-weight: 400;">and</span></i><span style="font-weight: 400;"> perks</span></a><span style="font-weight: 400;">) is up to you — but more employee options bode well for </span><a href="/blog/win-the-talent-war.html"><span style="font-weight: 400;">winning the talent war</span></a><span style="font-weight: 400;">.</span></p> 
             <ul> 
              <li><strong>Employee Happiness</strong></li> 
             </ul> <p><span style="font-weight: 400;">Studies have shown time and time again that </span><a href="http://www.fastcompany.com/3048751/the-future-of-work/happy-employees-are-12-more-productive-at-work"><span style="font-weight: 400;">employee happiness is tied to higher productivity</span></a><span style="font-weight: 400;"> and overall business success. And employees who aren’t stressed out about whether they can afford a routine doctor's visit are more likely to be in good health and in good spirits.</span></p> 
             <ul> 
              <li><strong>Retention</strong></li> 
             </ul> <p><span style="font-weight: 400;">Employees who have benefits are more likely to be satisfied with their jobs and less likely to </span><a href="http://good.co/blog/2013/11/13/workplace-happiness/"><span style="font-weight: 400;">leave for greener pastures</span></a><span style="font-weight: 400;">. In fact, a CAP study found that it can cost between </span><a href="https://www.americanprogress.org/wp-content/uploads/2012/11/CostofTurnover.pdf"><span style="font-weight: 400;">16-20% of a person’s salary just to replace them</span></a><span style="font-weight: 400;"> — which means it will save you money in the long haul to have those benefits around.</span></p> <p><span style="font-weight: 400;"><img src="//images.contentful.com/mnc2gcng0j8q/5nQpKi3EvSeCcYmK8G4akA/047a6623b674d2774648c716c0e5c383/smallgroup.jpg?&w=723&h=362" alt="smallgroup.jpg" title="smallgroup.jpg" width="723" height="362"></span></p> <h3><span style="font-weight: 400;">Benefits You Can Offer</span></h3> 
             <ul> 
              <li><strong>Health Insurance</strong></li> 
             </ul> <p><span style="font-weight: 400;">If there’s one thing you shouldn’t skip out on, it’s this. Health insurance plans may range from low to high deductible plans depending on what you’re offering your employees.</span></p> 
             <ul> 
              <li><strong>Retirement Plan</strong></li> 
             </ul> <p><span style="font-weight: 400;">There are plenty of options for retirement plans, one of which you’ll recognize instantly.</span></p> 
             <ul> 
              <li style="font-weight: 400;">

Simplified Employee Pension Plan (SEP IRA) - Best for small business owners to save for retirement and get a tax-deferred benefit

  • Savings Incentive Match Plan for Employees (SIMPLE IRA) - A non-conventional plan due to lack of start-up and operating costs of a traditional plan, employers match the amount their employees contribute
  • 401(k) plan - A widely used plan with companies, employees allocate a portion of their paycheck pre-tax to their retirement savings.  
    • Unemployment Benefits

    Both state and federal law require you to have unemployment insurance. It will protect both you and your workers from unforeseen circumstances, and you can check out our guide to it here.

    • Disability Insurance

    If your business is located in New York, New Jersey, Hawaii, California, or Rhode Island, you’re required to offer disability insurance. If your company is in a different state and you can’t afford it, consider voluntary benefits — a small amount of money will be pulled out of an employee’s paycheck to cover the insurance.

    Related Article: What’s the Difference Between an Employee Benefit and Perk?

    How to Explore Your Options

    There are plenty of ways to go about getting small group benefits, what matters is that you find the right fit for you and your company. Here is an overview to help:

    • SHOP Marketplace

    The SHOP Marketplace (Small Business Health Options Program) is part of the Affordable Care Act’s initiative to bring healthcare to small businesses. In order to be eligible, you must have 50 or fewer employees. However, there are variations on these laws state by state, such as how many employees need to enroll for eligibility. If you use SHOP, you’ll get small business tax credits and brokers to help you select small group plans.

    • Individual Health Insurance

    If you’re buying individual health insurance, you’ll have to go through a broker or the public marketplace. Employees then select from a plan and carrier that’s available. If your employees have health insurance tax credits, they may also be eligible for discounts on premiums.

    A broker will act as a consultant for the small group. That means he or she will set up the defined contribution allowances and sell individual policies to your employees. Most people who choose this option aren’t eligible for group health insurance. If you feel like you’re priced out of group health insurance, consider going with a PEO.

    • PEOs

    PEOs are the secret sauce for small group benefits at enterprise prices. We’ve written a more extensive blog post about PEOs here, but the nuts and bolts go like this: PEOs aggregate small groups together, so your company can get all the healthcare bargaining powers that corporations and large businesses take advantage of everyday.

    Whether a PEO is right for you depends on various factors. PEOs also manage HR paperwork, take care of payroll, and safeguard you from being fined for compliance risks. Ultimately, you have several options to decide which small group benefits options will work best for you.

    Get the full guide on how PEOs work for small businesses.

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    This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.