Why Do Companies Offer Health Insurance to Employees?

health care piggy bankThere are plenty of companies that offer (at least some) of their workers an employer sponsored health insurance plan. Many have been doing so for decades. Why? It turns out that there are certain benefits that employers receive as a result of having insured workers.

In the news lately, there have been some companies that openly stated that they will not be offering their workers an employer sponsored ealth plan. Right now, the majority of Americans who have health insurance coverage are able to afford it because it comes to them through their employer. It can be somewhat shocking to hear that a company doesn’t want its workers to have healthcare coverage.

Offering workers a health plan isn’t something new. This practice has been going on for a very long time. Right now, (and in the past) there is no law requiring employers to offer health insurance to their workers. Yet, many are offering it. Why? It is because there are ways that companies benefit from having workers that have access to health care.

Employer sponsored health insurance helps a company to attract the most qualified workers. They want workers who have experience, who have specific qualifications, and who are going to be good at their jobs. Companies who don’t offer health benefits could lose potential workers to competitors who do offer it to workers.

Employer sponsored health insurance helps a company to keep good workers. At some point, everyone is going to need health insurance coverage. If a person’s job doesn’t offer it, that person has reason to seek out a different job. Companies that offer health plans to their workers have a better chance of keeping them.

Employer sponsored health insurance increases productivity. People who have access to health insurance can go see a doctor when they get sick. They can get the care they need and return to health – and work. Sick workers will take more sick days, will work more slowly, and may potentially “share” their illness with the other workers (and customers). None of that helps a business make money.

Employer sponsored health insurance offers the employer a tax break. According to Zane Benefits employer sponsored health insurance is a non-taxable health benefit. Zane Benefits says:

“In the early 1940’s, the federal government changed the tax laws to allow businesses to provide health insurance coverage as part of an employee’s compensation package 100% tax-free.”

Image by 401(K) 2012 on Flickr