The benefit that keeps good people from leaving

For owners with two to fifty on payroll · a five-minute read · Tatiana Andrea Real

When a small business loses someone good, the exit interview usually blames pay. Often it wasn’t pay. The other offer came with health insurance and yours didn’t.

It shows up in the household, too. Workers at small firms pay an average of $8,889 a year toward family coverage, against $6,227 at large firms. That’s about $220 a month out of one family’s budget, and it’s usually the spouse doing that math who pushes for the other job.

And 53 percent of small-firm workers sit in a plan with a single deductible of $2,000 or more, against 28 percent at large firms. Two gaps, same direction.

Now the number that surprises owners: you don’t pay all of it. The average small-firm premium is $9,211 a year for single coverage and $26,054 for family, but how you split that with your team is your call. Plenty of small employers cover a solid share of employee-only coverage and let people buy up from there.

There’s also a tax credit most owners never claim. If you have fewer than 25 full-time equivalent employees, your average employee salary is roughly $65,000 or less, and you pay at least half of your full-time employees’ premiums, you may qualify for the Small Business Health Care Tax Credit. It’s worth up to 50 percent of what you contribute, or 35 percent for a non-profit. The catch is that you generally have to enroll through SHOP to claim it, and that’s exactly the step people skip.

If a full group plan is more than you want to take on, it isn’t the only door. A QSEHRA lets a business with fewer than 50 employees and no group plan reimburse employees tax-free for coverage they buy themselves, up to annual caps the IRS sets. An ICHRA has no cap and lets you set different contributions for different classes of worker. Both turn an unpredictable renewal into a number you pick.

Here’s the part a broker who only sells group plans won’t tell you. If you offer coverage that counts as affordable and meets minimum value, your employees generally stop qualifying for Marketplace subsidies. That holds even for someone who turns your plan down. For a team of lower-wage workers who get a large premium credit today, a group plan can leave them worse off than they are now.

So the right answer depends on who works for you, not on what’s easiest to sell. A team of well-paid people who earn past subsidy range is usually better off on a group plan. A team of lower-wage workers may do better with you contributing through an ICHRA, or in some cases with you staying out of it and saying so honestly.

What this buys you when it fits. An employee who has to go find their own coverage is an employee already shopping, and someone comparing plans is one conversation away from comparing jobs. Putting something on the table, even a modest contribution toward employee-only coverage, changes the math of leaving. It’s also the cheapest recruiting you’ll ever do, because it shows up in the job post before anybody has to negotiate.

Bring me a headcount, a rough payroll range, and how many of your people have family to cover. Fifteen minutes and you’ll know which of the four routes fits your business, including the one where the answer isn’t yet.