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Saving Money and Saving Lives

Offering health benefits for your employees will impact more than just quality of life; find out from an industry expert how it can benefit your bottom line too!

This piece includes excerpts from a personal interview with Thomas A. Guiler, co-founder and vice president of Benefit Resource, Inc., in Rochester, NY

Choosing the health insurance program most suitable to the needs and resources of your small business can seem like a daunting task. Although it should be seen as a key benefit of employment, health insurance can be one of your biggest expenses and what affects net profits at the end of the year. However, by utilizing available tax benefits, there are ways to provide health insurance to your employees without taking a big bite out of your bottom line.

The high cost of premiums tops the list of reasons why small business owners often do not provide health insurance. “On average, with medium to large size employers, the employers are actually paying for a good portion of that premium, probably 50% of it,” says Thomas A. Guiler, co-founder and vice president of Benefit Resource, Inc. “For a small business owner to keep pace with that is very difficult.”

Premium-Only Plans (POPs) can help offset all or part of these costs. Payments made for employee premiums are subtracted pre-tax, allowing for savings on FICA and other payroll taxes for employers. For the employee, by allowing them to pay for health insurance premiums with pre-tax dollars, they can save on state, federal and FICA taxes and enjoy higher take-home pay. The types of benefits plans that can be contained within a POP are health, vision, dental and disability.

"The only restrictions, and this does become an issue for smaller employers, is on who can participate in a company,” Guiler explains. "In a regular c-corporation, any employee can participate, however, s-corporations, which tend to be smaller employers that have more than 2% ownership, cannot participate.” Partnerships (partners) and sole proprietors are restricted as well.

"If the employer can’t afford to pay half of it, maybe he can pay 25% of the cost of the health insurance. When employees pay that other 75%, [the employer] is saving 30-40% of the cost of that premium. In a lot of cases it’s a good way to offer health insurance,” Guiler concludes.

When shopping for health insurance for your company, there are professionals available who can guide you in making the best decision. These include agents (representatives of insurance companies), brokers (representatives of a number of different carriers or plans) and consultants (help evaluate your needs and design an individualized plan).

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