Should I Offer My Employees Health Insurance Or 401(k) First?
It is an employees’ market today, which makes it a challenge to find the best talent. Once you get them on board, the next challenge is retention. Offering a great employee benefits package is one of the best ways to keep your best employees. Although there is some cost to the company, providing a range of employee benefits helps keep your business stable.
If you are just beginning to build your benefits package, you may be wondering which benefit to offer your employees first. Two top contenders are group health insurance and a 401(k), but which should you start with?
How Important Is Health Insurance To Employees?
Offering group health insurance to your employees is a simple yet effective way to help attract and retain talent. Providing health benefits can also help your company by boosting morale, increasing productivity, and contributing to positive company culture.
Group health insurance is a popular employee benefit for a simple reason – healthcare is extremely costly today. Employees want the security of knowing they have medical coverage in case they, or their family members, become ill or injured. Employees today are not willing to accept a poor work-life balance. Many companies are realizing that group health insurance is not just a nice benefit to offer, but essential in attracting and retaining employees.
Pros & Cons Of Offering Group Health Insurance
Benefits are an indispensable part of any employee compensation package, and health insurance is perhaps the most crucial benefit. The major disadvantage to employers is the sharp increase in healthcare costs over the past several years.
The pros of offering group health insurance include:
It helps your company attract and retain top talent.
It entitles your company to certain tax advantages.
If your business is incorporated, your insurance costs, along with those of your employees, are tax-deductible.
If your business has less than 20 employees, you can use your healthcare tax credit when you buy group health insurance.
Your employees get group rates for buying health insurance through your company, even if you are not in a position to contribute.
Preventative care offered by insurance companies can mean less employee time off work for illness.
How Popular Is A 401(k) With Employees?
Although it might not be quite as important as group health insurance, a 401(k) may come in as a close second in terms of what employees want. 401(k) retirement plans are popular with employees because they can use them to put pre-tax compensation toward their retirement, reducing their tax bills while maximizing contributions toward the future. Many employers match the funds the employees contribute to a 401(k), which further enhances the advantages of the plan.
Offering a 401(k) to employees also has tax advantages for the employers. Your company may be allowed a tax deduction for its contributions to the plan. 401(k) is one of the most popular retirement plans offered by small employers today.
Building a group benefits package is a complicated process involving many important decisions that may be critical to your company’s bottom line. Our knowledgeable agent can provide friendly, professional guidance through the process.