Sep 10, 2014 1:00 AM

Author: Office of Public Affairs

For some business owners, the implementation of the Affordable Care Act brings up new questions about offering health insurance as a benefit to employees. Why pay for employees’ health insurance when you can potentially increase their salaries slightly and send them to a health insurance marketplace where they can individually choose the plans that are the best fit for them, right?

Not-so-fast, say Utah business leaders Mark Miller and David Entwistle. While you might look at dropping health insurance 
as a way to reduce costs during a lingering recession and think you might be helping your employees by giving them greater options, your decision could have the opposite effect — leaving you to watch your best employees walk out the door for better benefits packages elsewhere.

So what are the best practices when it comes to offering employee benefits, particularly health insurance? Here are some key points from Miller, leader of the Mark Miller Auto Group, and Entwistle, CEO of University of Utah Hospitals and Clinics.

What Do I Need to Offer?

First things first. There are certain benefits that business leaders are required by law to give their employees. These benefits include allowing employees time off to vote, engage in military service and serve on jury duty; complying with the Federal Family and Medical Leave Act (FMLA) and honoring workers’ compensation requirements.

Some states also require businesses to pitch in to short-term disability programs designed to help workers. And companies are responsible to pay state and federal unemployment taxes as a measure to provide for those who are unemployed. Businesses must withhold FICA taxes from employees’ wages as a measure to provide for retirement and disability programs.

Outside of those mandates, however, companies have a choice on whether to offer retirement, life insurance, paid vacations and holidays as well as health care, including dental and vision.

Why Are Good Benefits Important?

It’s a no-brainer: talent retention.
 Miller notes that at his company, he looks to hire people interested in building a career over taking a short-term job. The people with the kind of characteristics he’d like to move into a leadership role within the company one day are the same kind of people who know what makes a good job—and to most people that means taking a job with full-benefits, including health insurance.

While offering employees a higher wage with the assumption that they’ll put the money towards a health care plan on the health care exchange may seem progressive, it’s also fraught with the simple reality that employees may choose to use that extra money on expenditures other than health care.

That choice would leave some of Miller’s employees sick without a way to pay for care, leaving the company in the lurch while they take time away for an illness that might not have been lost if seeing a health care provider through company-provided health insurance.

In general, Miller says he has found that offering good benefits keeps employees motivated to keep working for his dealerships. He sees paid time off for vacations and holidays as an extension of health care benefits, as time with family and friends gives an employee a chance to recharge his or her batteries and return to work with new goals.

“Having healthier employees translates to more profits down the road,” says Miller, whose interest and passion for health care has led him to serve on the community board for University of Utah Hospitals and Clinics. “Plus, I think it’s the right thing to do as an employer in the first place.”

Could Businesses Benefit Through Offering Insurance Plans?

The short answer to that question is yes. In many cases, businesses are offered cost breaks for the number of insurance plans they purchase.

At University of Utah Hospitals and Clinics, where more than 9,000 people are insured, plans are purchased at a reasonable rate that wouldn’t necessarily be available to employees purchasing the same plan on a health care exchange, says Entwistle.

He adds that businesses are usually in a better position to negotiate depending on the size of their organization, but in many cases, employees look to their employer as a place to get affordable, lower cost insurance.

New health care exchanges can be confusing and time- intensive, he notes, and many employees may prefer the streamlined process of getting insurance through work.

Ultimately, however, Entwistle reiterates Miller’s belief that great employees deserve great health insurance through the workplace.

“We value our employees and we value their health,” Entwistle says. “If they fall into health challenges or problems, we don’t want them to have to take on the financial challenges that being uninsured brings. Employers are wise to help employees make the right decisions by offering the insurance."

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