Since the Affordable Health Care Act took effect, more small businesses are now required to provide health coverage for their employees.
According to a survey by the National Federation of Independent Business, more small businesses will offer coverage in 2014 even though costs are rising. The same study reported that healthcare costs for businesses went up an average of 12%.
Tax Benefits for Small Businesses
While the new law does have requirements for many small businesses, there are some tax benefits that are only applicable to those companies.
A business that has fewer than 25 full-time employees or the equivalent of that can receive tax credits if the average salary is around $50,000 or less. The tax credit is only good when a health plan is purchased through the SHOP marketplace.
With the tax credit, employers could get back 50% of the amount of the premiums they pay in a year. This can make the cost of health insurance more affordable.
According to the same report, premiums are $6,271 on average for small businesses each month. To deal with this cost increase, many businesses are delaying or reducing investment in the business for growth. They may also hand down the cost or a portion of it to their employees.
While the cost is a problem for many small businesses, they also have to see the benefit of offering healthcare for employees.
When you offer health benefits, you attract a better quality employee. As job candidates see companies cutting hours to keep from having to pay for healthcare, a company that does provide these benefits will look more appealing.
As competition grows in nearly every area for small businesses, having a drawing card like great health benefits can bring in the best employees that might not look at smaller companies otherwise.
According to a survey done by Monster, healthcare is the most important benefit to the majority of the people that participated with 32% putting it first.
For companies that can’t afford the highest salaries, the only way they can compete for the most qualified job applicants is by offering the best benefits package.
To save money when choosing a health insurance plan, businesses can look for discounts.
The SHOP exchange allows them to compare prices, benefits and even choose the amount of coverage they can afford as long as it meets the requirements. Since pre-existing conditions are not even considered when submitting applications for health coverage, businesses won’t be penalized.
The final criteria for determining the cost of healthcare depends on several factors. Businesses can shop around for the best rates in the same way that individuals find the best premiums.
While healthcare insurance is an additional cost for many small companies, it can also be beneficial for any business that wants to be competitive with the quality of employees they secure.
With tax benefits for many small businesses, healthcare can be affordable, too.
Author: Joyce Morse is an author who writes on a variety of topics, including human resources and financing a small business.
Published: May 15, 2014