Fast-paced startups are becoming a preferred workplace for individuals entering the job market. With so much new talent raring to join them and their vision, startup founders have their pick of talent.
Founding a startup is not without its challenges, however. One of the biggest challenges faced by startup founders is working with a very lean budget as the company tries to grow and scale.
Because the allocation of a limited budget is often a big priority for startups, and because most startups don’t have large HR teams, not-so immediate priorities like healthcare often get thrown on the backburner
While many startups put wellness as a priority in their company culture, founders should take care to pay attention to employee health insurance.
Employers with 50 or more full-time equivalent employees are required to provide health coverage to full-time employees, and if they don’t, they have to pay a fine. Even though companies under 50 full-time equivalent employees are exempt from this mandate, there is a benefit for founders to subsidize their team’s health insurance right from the get-go. Here, we take a look at 5 essential reasons you should be insuring your team.
Why startup founders should get health insurance for their team
Reduces operating costs in the long run
Health insurance for startups is a great way to reduce operating costs without sacrificing important parts of the business. Many candidates and employees are more willing to take a job that pays less as long as health insurance benefits are included, and excellent benefits help companies retain employees and keep them happy.
Generally, it costs more for an individual to purchase their own health insurance plans, be it for themselves or for their families. Company-provided health insurance, sponsored by employers is more desirable for employees.
Attract and keep highly talented members of your team
It’s no secret that retaining employees is much more cost-effective than hiring new ones. Retaining employees refers to a savings cost in every sense. An employer will save operating costs, such as training costs. Money spent on job ads and outside recruiters costs keeps your HR team’s allotted spend under control. Less time hiring and interviewing new prospects, as well as onboarding issues. HR could be working on other matters needed by the company.
Health insurance can be a big motivating factor that gets these candidates to choose your startup. Job seekers today know that insurance is a significant benefit to have, and is an essential factor that they consider while weighing their options.
Bottom line: both candidates and current employees will be more than willing to stay at your startup if you can prove to them that you have generous benefits. At this point, health insurance is provided by so many employers that it seems like a basic benefit to people in the job market.
Today, businesses that offer health insurance plans for their employees can stand to gain from tax advantages. They can deduct and record their portion of their contribution to the plan as a business expenses that later on receive a tax advantage.
And if your startup has been incorporated, your health insurance as the business owner is also deductible alongside your contributions for your employees.
Plus in 2017, the Tax Cuts and Jobs Act (according to smith-howard dot com) was passed into law. One of the main highlights is that it significantly reduced the income tax rates of individuals and corporations. For businesses, it mostly meant a few things like a new corporate tax rate of 21%, and the corporate alternative minimum tax (AMT) of businesses that averaged annual gross receipts of $7.5 million for the preceding three years would be tax-exempt.
You can pool the savings your startup gets from these tax cuts into providing health insurance for your team.
Increased productivity and team morale
A healthy team is a more productive team – period. So it should come as no surprise that healthy employees have been found to be three times more productive than sick ones.
Teams with healthcare coverage can afford treatments faster and can take fewer sick days, making sure your startup goals are making consistent progress every day.
Plus, people who know that their company is covering their health insurance plan can be more empowered startup employees, trusting that they’re in good hands. This boosts team morale overall, and your team won’t be afraid to put their best foot forward.
How to choose the right health insurance plan
Now that you know why you should prioritize your team’s health insurance, it’s time to see the steps you need to take to choose the right health insurance for your startup.
Figure out what your employees want and need
If you have employees already, you can ask them to anonymously share what they value in a health insurance plan. You can also tell your employees which plans you’re considering and see if they have preferences between the options you have laid out for them.
If you don’t have employees, think through some scenarios that might impact your future employees—you may want them to be able to add dependents to the plan if they have families, or make sure their out-of-pocket costs are low if they’re dealing with chronic illnesses.
Set a budget
You’ll need to determine the budget you’d want to allocate to paying insurance premiums. There’s no hard and set rule to this – it ultimately depends on several different factors that are unique to your startup. You’ve already reviewed the needs of your employees, so you should take that into account.
The amount you spend on healthcare can be budgeted as a percentage of your payroll or as a fixed monthly cost based on every employee.
Be sure to review your budget regularly as time passes. You’ll want to monitor if insurance costs are increasing or if you can benefit from bigger premium discounts as your company grows and includes more people in your group insurance coverage.
Consult with a health benefits consultant if you want more guidance
For peace of mind, consulting with a health benefits consultant can be a good idea. If you plan to consult an insurance broker or consultant, have these questions at the ready to be able to get the most from your meeting:
- What are the types of plans you can offer our company?
- Will we have a dedicated account manager?
- What’s your process for enrolling in plans?
- What are your fees?
- Do you have other benefits or services with your offer?
Your startup stands to benefit when it invests in health insurance for its employees. It becomes easier to attract and retain top talents in the organization, and you can focus on the big picture tasks while resting assured your team is running in tip-top shape.
Remember: a healthy – and insured team is more likely to be productive and much more likely to be a motivated team.
Image Credit: Karolina Grabowska; Pexels