Small businesses have become more prevalent than ever. With more and more people starting their own business, a common question that arises is whether your company should provide health insurance.
Is Your Small Business Required to Provide Health Insurance?
Under The Affordable Care Act (ACA), small businesses with less than 50 employees are not required to provide health insurance to their employees. This means that your company will not face a tax penalty for not providing insurance.
However, if you decide to offer your employees health insurance, you may qualify for a “Small Business Health Care Tax Credit.” There are a few requirements in order to receive this credit, such as:
• The company should have less than 25 full-time employees
• The average salary of workers should be lower than $50,600 per year
• The company should pay at least 50% of the cost of an employee’s health insurance premium
We recommend reviewing the IRS website for the most up-to-date information regarding the Small Business Health Care Tax Credit, as it may change from time to time.
Why You Should Consider Offering Health Insurance
Improved Hiring and Retention
A major benefit of being employed is the health insurance that comes with it. Without health insurance, the out-of-pocket expenses for an individual can get very hefty in no time. In fact, many employees would choose health benefits over retirement benefits if only one were offered. Without a doubt, offering health insurance improves employee retention rates.
There are several different health plan options to choose from depending on desired coverage and cost. A great starting point to research health insurance providers. You can also access a huge network by visiting healthcare.gov.
Lower Payroll Taxes
The financial advantage of providing health insurance through your small business is the tax benefits. Typically, pre-tax dollars pay for health insurance. This means your taxable income decreases. A lower taxable income results in lower business payroll taxes and lower income taxes for employees.
Healthier Employees
A healthier workforce results in increased productivity. In fact, striving for a healthy workforce proves to your employees that you care about their mental, emotional, and physical well-being. When your employees know that they are covered, they have less mental fatigue and can live their lives without worries.
Many health insurance companies offer additional well-being programs to employees at no additional charge. These programs are designed to promote health and fitness. The programs reward your employees by offering discounts or even cash rewards for participating in health challenges and similar programs.
Deciding on health insurance options is a big decision for any company. The most important step is to research which coverage is best for your company and employees.
How FINSYNC Can Help
FINSYNC allows you to run your business on One Platform. You can send and receive payments, process payroll, automate accounting, and manage cash flow. To learn more about how we can help your business start, scale, and succeed, contact us today.