Small businesses with fewer than 50 employees often think providing health insurance isn’t worth the hassle. It’s true that cost concerns, administrative burdens, and uncertainty about regulations can give any owner pause. So, why offer health insurance at all if you’re not legally required to?
As it turns out, there are some very good reasons. In fact, offering health insurance through a partner like a PEO (Professional Employer Organization) can be far more affordable and streamlined than many business owners realize, and it brings tangible benefits in employee morale and business performance.
Below, answer 5 pressing questions about why adding health insurance to your employee benefits package is a smart move.
High turnover is costly and disruptive for any business. Losing employees means spending extra time and money recruiting and training replacements, not to mention the hit to morale and company culture when employees keep cycling in and out.
One proven way a business can boost retention and loyalty is by offering a competitive benefits package, with health insurance at its core. In fact, research confirms what many HR professionals suspect:
In other words, a healthier, less-stressed workforce is a more engaged workforce. Employees who know that they and their families are covered medically tend to experience less personal stress, which means more focus and energy at work. Employees are less distracted by worry over medical bills or missed check-ups. By providing insurance, business owners signal that they care about employee well-being, and employees often reciprocate with greater commitment.
Absolutely. In today’s job market, job seekers weigh benefits as a top factor when choosing an employer, sometimes even more than salary. SMBs often compete with larger corporations for skilled candidates, and while your small business may not match a large company's salary offer, you can level the playing field with strong benefits.
Consider these points:
According to a 2024 survey by Voya Financial, nearly 3 in 4 employed Americans would accept a job with a slightly lower salary if it offered better health care coverage (for example, lower premiums and out-of-pocket costs).
That’s a striking figure: the majority of workers might choose a job that pays less if it provides health insurance and related benefits. Another way to look at it: if your business is not offering health benefits, you could be excluding ~75% of the talent pool who consider those benefits non-negotiable.
In a competitive market, health insurance can be the deciding factor for a candidate. Big companies often have lavish benefits packages, but by utilizing a PEO or benefits broker, small businesses can access similarly robust plans.
By highlighting health insurance in job postings and interviews, businesses signal professionalism and stability. It shows candidates that even as a smaller employer, you invest in your team’s well-being.
In many cases, offering insurance can save business owners money, or at least offset part of the cost through credits and deductions. The most notable program in the U.S. is the Small Business Health Care Tax Credit, which is specifically designed to help small employers who want to offer insurance.
To be eligible, businesses must meet a few criteria:
If these requirements are satisfied, the tax credit can be substantial. For instance, a qualifying company that pays $70,000 in premiums might get a $35,000 credit back. And even after maximizing the credit, any remaining premium costs can be deducted as a business expense.
In practice, very small firms (under 10 employees, low wages) get the biggest credits, but even those businesses on the upper end (20-24 employees, near the wage cutoff) could see a partial credit.
Depending on the state or locality, there may be additional incentives for offering health benefits like wellness program grants or local tax abatements. These vary widely, so it’s worth checking with a local small business development center, an accountant, or a local BBSI representative.
One of the biggest misconceptions is that health insurance is automatically cost-prohibitive for small businesses. While going to the insurance market alone can sometimes lead to higher premiums, small businesses today have more accessible options for comprehensive, competitive coverage than ever before.
With the right partner and approach, affordability is no longer out of reach.
BBSI offers clients access to a variety of health insurance plans that are typically available to larger organizations. BBSI’s relationships with trusted carriers and providers allow small and mid-sized businesses to explore high-quality plan options at competitive rates. This enables businesses to offer robust benefits packages that meet employee expectations without overextending financially.
Businesses can choose from a range of plan designs, including HMO, PPO, high-deductible health plans with HSAs, and more. This flexibility helps employers match coverage options to the needs of their workforce while maintaining budget control. Whether you’re looking for basic medical coverage or a more comprehensive benefits package that includes dental and vision, there are scalable solutions available.
It's natural to worry that providing health benefits will bog management down in paperwork, compliance, and endless HR tasks. Small businesses often have no HR department at all, leaving the owner or manager to juggle those duties.
The good news is, administering health insurance has gotten much easier, especially when partnering with the right organizations. Here’s why the administrative burden shouldn’t stop business owners from offering health insurance:
Keeping up with evolving employment laws, healthcare regulations, and reporting requirements (such as those from the ACA) can be complex.
BBSI's teams stay current with regulatory developments and provide guidance to help businesses keep themselves compliant.
The benefits of providing health insurance for small business employees extend far beyond simple medical coverage.
From fostering a culture of care and commitment to improving employee loyalty, and even realizing potential tax benefits, small businesses that offer health insurance will have a competitive edge over those that don’t.
The key lies in finding the right partner for health insurance coverage, and BBSI is here to help.
BBSI clients have access to affordable and flexible health insurance plans that not only fit budgets but also improve the lives of workers. With expert guidance and support, businesses of all sizes and in any industry can start offering health insurance benefits and experience the benefits of a happier, healthier workforce.
Interested in learning more about how BBSI can help small businesses access affordable health insurance plans? Get in touch with your local BBSI representative today.
Small businesses often hesitate to offer health insurance due to perceived cost and complexity. Yet, as this guide explains, providing coverage can enhance employee satisfaction, strengthen retention, and even save money through tax credits. With the right partner—like a PEO—small businesses can access affordable, comprehensive plans without the administrative strain.
For business owners, offering health insurance isn’t just an employee perk — it’s a long-term investment in the company’s workforce and business growth. Start exploring how a PEO can help you deliver affordable, competitive health coverage with ease.