There are many important decisions to make when you are starting up your own business, and the decision to offer health benefits to employees is a big one. Sponsoring a health plan comes with costs that average roughly 15% of payroll for smaller companies, and may cause a startup to decide against offering one due to all the other initial expenses they will have.
But offering health benefits is a crucial part of any company’s compensation strategy. It will determine the kind of employees you can attract and hold, the satisfaction people will find being a part of your team, and your reputation as a company who cares.
You don’t have to offer benefits, but you should
There is no legal obligation for employers to offer health benefits as part of their compensation, and some may choose not to do so. But a great many more employers realize that the benefits of providing a health plan are far greater than the money they save by forgoing one.
A major concern for startups is finding high quality employees and convincing them to stick around long term to drive the business to success. This means fostering a feeling of loyalty and making the position with the company seem too valuable to leave behind. Health benefits are a great way to offer a perk that seems too valuable to walk away from, and to give employees the feeling that you care for them and their well-being.
Another important factor to consider is that benefits can be much more cost effective than salary increases. Keeping employees around long term means increasing their compensation as appropriate, and startups need to be concerned with their cash-flow management. Increasing salaries may not be financially sound due to the increased tax that comes with the raise, but upping the benefits package can be a more affordable way to achieve the same effect.
Benefits can be flexible as you grow
A company just beginning to hire more employees and offer benefits in their compensation strategy has plenty of scalable options that they can adjust as they grow. You can start small and offer only the most basic plan, or even offer Health Spending Account (HSA) options instead. These can provide complete budget certainty, while giving employees the flexible option to use their funds however they need them. Additionally, HSAs are 100% tax deductible.
As your company grows you can consider covering more of the health benefit costs to raise the attractiveness of your compensation plans. Your employees will definitely recognize the increase in value, and be encouraged to stick around and continue their hard work. The best way to achieve these results is to find a healthcare solution that offers customizable benefit packages that can be scaled according to company size and budget.
Offering at least some form of health benefits is a smart financial move for a startup that can be scaled up or down according to business needs while maintaining quality compensation for employees to keep them satisfied.
