Health Insurance Plans as a Competitive Advantage

In a tight labor market, the quality of your benefits package can make the difference between attracting star candidates and average performers.

Aside from paid vacation, 401(k) plans and profit sharing, health insurance is one of the most important components of an employee benefits package. Yet according to a recent report from the SBA, less than half (47 percent) of all small firms with fewer than 50 employees offer health plans.

These statistics make large companies — and the comprehensive benefits they generally offer — extremely enticing to a prospective employee. Small business owners have recognized this and are increasingly using health care benefit packages to attract and retain topflight employees.

Clearly, health plans fully funded by the employer are ideal for employees, but rising health care costs make these plans prohibitively expensive for many small business owners. Fortunately, there are some ways for even the smallest businesses to offer health benefits.

Ask employees to share insurance costs. While asking employees to share health care costs might seem like a bad idea, it can actually be an effective tool that helps employees value their health care plans.

Manage costs through a phased approach. Another consideration is a phased approach, in which employees share the cost of their benefits on a decreasing basis as they build seniority with the company.

Before you make any decisions about your benefits plan, research your market thoroughly to make sure you offer competitive benefits. Remember that the same types of companies compete for similar pools of employees — if your direct competitors offer full benefits, you should too.

The process of putting together an employee benefits package need not be arduous, but you do need to be informed. Begin your research by talking to a consultant or attorney who works in the employee benefits industry.