As an employer, making the decision whether you should choose a 401k plan or a group health plan can be a difficult one.
Employees have similar characteristics like consumers, and they value benefits from the company they choose to work for.
Before accepting a job, most employees will weigh the various employee benefits that are indispensable to them.
Retaining the best taskforce in your business requires you to pull out all the intrinsic stops to encourage them. But, how do you determine which employee benefit to adopt first?
401(K) Plan or Group Health?
Stable retirement and viable health insurance plans are both paramount for your employees. Diligently selecting the best plan ensures that you retain your best employees and motivate them to be more productive.
How Important is Group Health Insurance?
A report by the Bureau of Labor Statistics indicates that 69% of employees in the private sector have access to health insurance. Arguably, group health insurance is a crucial benefit in any organization.
Since medical costs are incredibly costly, employees want assurance of a reliable group health insurance plan. A plan that covers their spouses and family will boost their morale of working in your organization.
Pros of Group Health Insurance
- Attracts top talent taskforce to your organization
- Protect the employees, employers, and their families
- Straightforward to claim
- Your company enjoys specific tax advantages.
- Your employees take advantage of subsidized group rates.
- The insurance costs are tax-exempt.
Cons of Group Health Insurance
- The process of applying for group health insurance is complicated.
- Does not cover retired employees
- Costly for small organizations
- Offering group health might affect your employees negatively
Should you a adopt 401(K) plan?
A 401(k)plan is a sponsored retirement account where your employees contribute a specific amount. The retirement strategy offers employees retirement wealth. Employees contribute a variable amount of money as dictated by the IRS.
Pros of 401(K)
- It is a tax-advantaged retirement saving plan.
- Motivates employees to be more productive
- Hassle-free payroll deductions.
- Employees have control of their contribution levels.
- Considerable tax advantages for the employer
Cons of 401(K)
- Requires administration and compliance support.
- The investment choices are static.
- The IRS limits the amount employees can save.
Should you choose a 401k plan or a group health plan?
Ask Your Employees
Involving your employees in decision making is integral in making the right decision. Ask your employees which employee benefit intrigues them the most.
Every employee is in a different situation, but if you are to only adopt one plan, it’s best to keep their interests in mind
Look at the Demographics of Your Employee
Your employee’s age, family dynamic and gender might also help decide which plan is best for your company.
If most of your employees are younger and still on their parent’s health plans, then going with a 401(k) plan might be best.
On the other side of the coin, if they all have families and insurance is a top priority for them, maybe a health plan is better suited for your workforce.
Either way, it’s best not to guess.