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Health insurance is the most important and valued fringe benefit to employees. For employers, providing it is a sound business decision:

  • Health insurance premiums that your company pays are fully tax-deductible as a business expense and are non-taxable income for employees. This tax deduction may be thought of as a discount to the cost of the health insurance.
  • Health insurance payments are excluded from base payroll when calculating an employer’s Medicare and Social Security payments. An equivalent amount paid in wages would be subject to Medicare and Social Security taxes.
  • Health insurance coverage gives employers great access to the price reductions that health insurance companies negotiate with doctors and other health care providers.
  • Offering health insurance may help employers:
    • Recruit high-quality workers
    • Reduce staff turnover
    • Reduce the cost of absenteeism
    • Limit disability and worker’s compensation claims

Providing health insurance coverage to your employees may seem like a challenge, but it is not beyond your reach. If you are a small- or medium-sized business owner or oversee decisions about health care benefits for your company, HealthInsurance.Alabama.Gov can help you make an informed decision about purchasing employer-sponsored health insurance and help you navigate through the purchasing process. HealthInsurance.Alabama.Gov will help you answer such questions as:

  • What types of health insurance plans are available to my company?
  • What steps do I need to go through to purchase health insurance?
  • What will be my estimated costs for purchasing a group health insurance plan?
  • What will be my estimated tax savings?
  • What other health benefit options are available to employees?

Most large employers do offer group health insurance benefits. However, those with a lower-paid workforce face low employee participation rates because employees do not think they can afford the employee cost share of the health insurance premium. HealthInsurance.Alabama.Gov offers tips to encourage employer participation in group health insurance benefits and other health benefit options.


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