Making the Most of Your Small Business’s Employee Health Insurance Offerings

Making the Most of Your Small Business's Employee Health Insurance OfferingsOffering good health insurance benefits can play a big part in attracting quality people to your company and in retaining them on your employee payroll. In addition, workers can be more productive when they’re healthy and free of worry about how they would pay for medical care if they or a family member were to fall ill.

But providing good health coverage for employees – or any coverage at all – is a challenge for small businesses. Because small firms don’t get the same price breaks that larger companies do, small businesses pay about 18 percent more per worker than large businesses do for similar health insurance policies, according to the Commonwealth Fund, an advocacy group for health care reform.

That differential in health insurance premiums for small businesses comes on top of dramatic year-over-year increases in health insurance costs for U.S. businesses as a whole. According to the Kaiser Family Foundation, the cost of employer-sponsored health insurance increased 9 percent for family coverage and 8 percent for single coverage in 2011. That rate of increase far outpaced the nation’s overall rate of inflation last year (about 3 percent), continuing a pattern that has persisted for more than a decade and that will continue into 2012.

How to handle these staggering cost increases?

First, it’s important to educate your workforce about the true cost of health insurance today. If you need to ask employees to begin contributing more toward their health insurance premiums, it cannot hurt to make sure that they understand the bigger picture.

Employees may think the payroll deduction that they see taken out of each paycheck for health insurance premiums is a large one, without having any idea just how much larger the employer contribution is. It’s not unusual for employers to pick up 80 percent of the tab for employee health insurance.

However, you might want to rethink a planned increase in employee premiums in light of a survey sponsored by eHealthInsurance. The survey showed that employees actually tend to prefer having benefits scaled back rather than paying more to keep them the same. Some companies opt first for dropping dental and vision insurance, but every company’s workforce has different needs.

If decisions must be made about changes to health coverage, give employees the opportunity to communicate their health insurance needs and preferences. It’s important to respect privacy and preserve confidentiality, so individual employees cannot be questioned about their past or current health status. But an anonymous poll or questionnaire can be circulated asking employees which types of benefits are most important to them. Your decisions can be guided by the results of such an employee poll.

Don’t forget that under the Affordable Care Act, a tax credit is available until 2014 for any small business with 25 or fewer employees whose average annual wage or salary is less than $50,000. Your small business could qualify for a credit of up to 35 percent of the premiums its pays for employee health insurance.

Whatever compensation package you offer your employees, Padgett Payroll Services can help you by providing accurate and timely small business payroll processing. Call the payroll specialists at Padgett Payroll Services today at 877-244-5842 to learn much more about how your business can benefit from outsourcing payroll to us.

More of the Jobless Are Receiving Unemployment Benefits

Unemployment Insurance Benefits Takeup RateNot only does unemployment in the United States remain high several years into our current historic “great recession,” but the percentage of the unemployed who are actually receiving unemployment benefits is at a 50-year high.

The number of the unemployed who are taking advantage of benefits provided by unemployment insurance – what economists call the “takeup rate” – never rises to anywhere near 100 percent. In fact, in 1986 the takeup rate was only 31 percent, meaning more than two-thirds of the unemployed population then did not receive benefits.

Takeup rates spiked in the two most recent past recessions, but even then the rates rose only to the 50-55 percent range. The current recession, on the other hand, has seen takeup rates as high as 68 percent. Casey B. Mulligan, a University of Chicago economics professor writing for the New York Times, says that the takeup rate in 2009 may have been the highest ever.

The reason that takeup rates spike in recessions is obvious to economists – the unemployed population during a recession includes a much higher proportion of people who were laid off, and probably qualify for benefits, as compared to people who voluntarily quit, and thus do not qualify.

Other variables that are thought to increase unemployment compensation takeup rates include:

  • offering higher levels of benefits
  • streamlining the process of filing for and receiving benefits (putting some of the application and certification process online, for instance)
  • higher levels of household financial distress (families’ lack of a savings cushion or home equity)
  • greater pessimism about the job market and the length of time it will take to find another job
  • reduced stigma about receiving benefits through a government-administered program

With so many payroll deductions to comply with such as unemployment insurance, social security and workers compensation, even small business payroll processing can be complicated. Padgett Payroll Services can simplify the life of a small business owner with our expert knowledge and efficient performance of employee payroll administration. Call Padgett Payroll Services today at 877-244-5842 to begin getting the benefits of professional payroll processing for your company.