If your business has 50 or fewer employees, there’s no penalty for not offering a group health insurance plan. But there are many bottom-line benefits that come with group insurance. Together, these benefits can make providing group health insurance more than worth the cost.

According to a recent survey conducted by the Kaiser Family Foundation, group health insurance plans are directly linked to fewer sick days, reduced turnover, productivity gains and higher job satisfaction.

Your company might qualify for a Small Business Health Care Tax Credit — log on to https://www.healthcare.gov for more — that could be worth up to 50 percent of what you pay for employees premiums — 35 percent for
non-profit employers.

To qualify for this credit, you must enroll in a Small Business Health Options Program In addition, all of the following must apply:

You have fewer than 25 full-time equivalent employees.

Your average employee salary is about $56,000 a year or less.

You pay at least 50 percent of your full-time employee premium costs.

You offer SHOP coverage to all full-time employees. You don’t have to offer coverage to employees working fewer than 30 hours a week or dependents .

The tax credit is highest for companies with fewer than 10 employees who are paid an average of $27,000 or less. The smaller the business, the bigger the credit.

What are the most common group health plans for small groups?

Health maintenance organization plans: These plans work exclusively with contracted providers. With HMOs, employees must use in-network care to be covered — with some rare and emergency exceptions. If your employee goes outside the HMO, the costs could be the responsibility of the employee. This limitation could pose a serious problem if your employees travel out of the HMO provider area.

Preferred provider organization plans: These plans combine a network of contracted “preferred” providers that accept agreed network reimbursement rates. At the same time, there are options to use out-of-network care. Out-of-network often costs significantly more. But overall, the PPO option isn’t as restrictive as HMOs.

Point of service plans: These plans combine elements of both HMOs and PPOs and require the use of a primary care doctor for all referrals. Since there’s no “network,” referrals don’t incur out-of-network costs. But self-referrals could.

How expensive is group health insurance?

According to the Kaiser Family Foundation, annual premiums for employer-sponsored family health coverage reached $23,968 in 2023, with workers on average paying $6,575 toward the cost of their coverage. The average deductible among covered workers in a plan with a general annual deductible was $1,735 for single coverage.

Consult benefits and tax advisors when opting into or out of employer-sponsored health insurance plans.