Will You Lose Employees if You Don’t Offer Health Insurance?

To nobody's surprise, the most popular employee benefit among U.S. workers is health insurance.

In a 2013 survey sponsored by Glassdoor and conducted by Harris Interactive, 76 percent of respondents said having a medical plan at work is the most important benefit to them.

In the Glassdoor survey, full- and part-time workers surveyed put medical coverage ahead of all other so-called fringe benefits, including liberal holidays/vacation/sick time policies; 401k/retirement/pension plans; dental plans; and employee development/training.

Is Health Coverage a Must?

To small businesses considering what benefits to offer their employees, this recent survey makes clear that employees place a high value on health coverage. But is the lack of medical coverage from a prospective or existing employer really a deal-breaker for the job seeker.

It clearly depends on the prospective employee, his or her age, family status, and health condition, all of which are factors that have a bearing on the importance of getting health insurance in the workplace.

An employee with a chronic health condition or with a family member with health problems has in the past looked for jobs with health insurance because of his or her inability to get an individual health plan that didn't bar coverage for the pre-existing condition.

Fewer Firms Offer Coverage

Although it appears that most employees prefer to work for a company that offers health coverage, the percentage of U.S. businesses that actually offer this benefit has gone down over the last several years.

 A study sponsored by Robert Wood Johnson Foundation found that the percentage of private sector businesses providing health insurance declined from 59 percent in 2000 to 52 percent in 2011. Among small businesses, the percentage offering health coverage slipped from 47 percent in 2000 to 38 percent in 2011.

ACA's Impact Uncertain

Not fully clear at this point is the impact of the Affordable Care Act's provisions to help small businesses provide health coverage to their employees.

Small businesses are defined under ACA as those with 50 employees or less. ACA provides a number of measures designed to lower the cost of providing health coverage for small businesses.

Although companies with 50 or fewer employees are exempted from the requirement to provide health coverage, the administration hopes that the incentives and tax credits that ACA offers will enable more of them to provide such health insurance.

ACA for Small Business

The Small Business Administration has a couple of articles that provide more information about ACA's provisions as they apply to small businesses.

Employers with 25 or fewer employees can learn more about the law's tax credits and the Small Business Health Options Program, or SHOP, in this SBA article. If your company has 26 to 50 employees, you'll find more about how ACA will affect your business here.

Ultimately, the decision about whether or not to offer health coverage to your employees rests on your company's financial ability to meet the costs of providing this benefit, with or without ACA's help.

It's true that some prospective employees may turn down a job offer from your business in favor of one that does offer health insurance.

However, it's also likely that many employees -- particularly young, healthy workers -- will find that other benefits of working for your company more than compensate for the lack of coverage.

Expanded Individual Coverage

Because the ACA also provides relatively low-cost health insurance plans for individuals, this expanded coverage may make it less important for some employees to get the coverage through the workplace.

To sum up, there is no single answer to the question this article poses.

The decision of an existing or prospective employee to work for a business depends on far too many individual variables to allow for generalization.

While employees with existing health problems and no current coverage may opt to work for companies that supply health insurance, many others may assign a lower priority to this benefit for themselves, at least under their current circumstances.

About the author

Jay Fremont is a freelance author who has written extensively about personal finance, corporate strategy, social media, and personal reputation.

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