Is small business health insurance a smart business move?
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A recent trend that many businesses are following is that of including their staff as an asset on their balance sheets.
This makes a lot of sense because no matter how sophisticated the production or service process, it can only be as good as the people behind it.
The rising degree of automation may make for smaller workforces in companies, but the importance of each member of the workforce increases, since the value of the contribution is higher.
Just as companies go in for preventive maintenance and service contracts to protect themselves from equipment breakdowns and other problems that could affect output, business health insurance plays a big role in ensuring the smooth functioning of the organization.
And no company will keep people on its payrolls just to fill in for those who may fall sick.
Since small businesses have even less scope for re-deploying manpower, looking after the medical needs of their workforces is even more critical to them. That is why small business health insurance is such big business for insurance companies.
No matter what the size of your small business – 1 employee or 100 – it makes sense to provide everyone with health insurance. In other words, taking out a group insurance policy for all your employees.
However, unlike family health insurance where every family member has to qualify individually for the insurance, in the case of a group insurance plan, the policy will automatically cover all those working for the company and all those whom you may hire during the validity of the policy.
This means the insurance company has no control over who is covered and their health at the time of being included in the policy. In the case of a family policy, the insurance company will be able to take the health of each individual into account while calculating the premium.
In the case of small business health insurance this is not possible, so the premiums are normally significantly higher than for a limited family policy.
Because of this many small companies, especially in the start up stage, feel that small business group health insurance is an avoidable expense. The logic is usually that with a small – (for example 10) - number of people, the chances of a person falling sick are less than if there are a large number of employees – say 100.
Actually, this is flawed logic. Statistically, the chances of a person falling sick or being injured are the same, whether the company employs 10 or 100 people.
When an employee falls sick or is injured and cannot work, the cost of treatment has to be borne either by the individual or the employer.
No one likes being sick and the company wants the worker back on the job as soon as possible. Since everyone has the same aim, offering small business health insurance benefits to employees is a good way of attracting and retaining good people in your business at a viable cost.
As an example let us say you have 25 people working in your business. Your health insurance costs you an average of $100 per month, per head - $2500 a month.
But the value to the employee could be in terms of hundreds of dollars a month. In other words, for $2500 a month, you are providing your employees benefits worth potentially $2,500 plus per month.
This is a huge motivating factor and when good employees are tempted to leave you for higher salaries, the value of the group health insurance small business that you are providing them will make a huge difference to their decision to stay or leave.
The bottom line is that providing small business health insurance goes a long way to building up employee morale and productivity.
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