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Employer-Provided Health Plans Generate Major ROI for Companies, Employees


Employer-provided coverage helps create a stronger workforce and gives employers valuable benefits to provide to their employees.

Published Mar 5, 2024 • by AHIP

More than half of all Americans – over 180 million hardworking individuals and their families – receive their health coverage through their jobs. Employer-provided coverage delivers affordable access to care, effective ways to improve health, and peace-of-mind. A study from Avalere Health found that employers with 100 or more workers saw a 47% return on investment (ROI) for offering health coverage in 2022. That ROI came in the form of increased recruitment and retention, better employee productivity, reductions in medical costs and disability claims, and tax benefits. That ROI is expected to jump to 52% by 2026, according to estimates from Avalere.

Employers should see a return of $346.6 billion in 2026, including $108 billion in direct medical cost reductions, and $139.70 billion in tax benefits according to Avalere.

Quality Health Benefits for Employees

Taking care of employees by offering quality, affordable health benefits is not only the right thing to do, but it’s good for business, Alabama State Senator Lance Bell writes in a guest opinion article for Yellowhammer. “Employer-provided coverage is a great example of private sector investment in the workforce,” Bell notes. “It is a commitment from employers to offer hardworking Alabama residents good, quality health care, at a fair cost – a commitment that makes more than just financial sense, but one that also inspires loyalty and fosters retention of top talent.”

While employers offer health coverage to improve the health and well-being of their employees, this Avalere study shows definitively that companies benefit as well by having a healthier, more productive workforce, according to Ray McCarty, president of Associated Industries of Missouri, the state’s oldest premier business association. “Offering health coverage is a strategic move that does more than meet a basic need. When companies provide health benefits, they position themselves as competitive players in the job market, attracting the best talent,” McCarty writes in The Missouri Times.

Investing in Employers & Employees

From small businesses to large corporations, employers of all sizes and industries know the benefits of offering health coverage to their employees. “To have healthy people that don’t have to focus on health-related issues is a benefit to my entire team,” said Dwayne K., a small business owner in Pennsylvania. “The longevity of our people, I think, is the return on investment.”

An AHIP Coverage@Work survey reported that their employer-provided coverage gives them financial peace of mind. Respondents also reported that coverage plays an important role in employee recruitment and an even more important role in employee retention. The average company pays between 70-80% of the cost of coverage, a majority have a more favorable impression of companies who provide their employees with health insurance benefits.

“Small business owners care deeply about their employees, customers, and communities. They continue to make incredible sacrifices to be able to invest in their employees' well-being. With high inflation and acute workforce shortages, small employers are more eager than ever to meet the needs of a diverse workforce and to remain competitive,” said Josselin Castillo, Manager, Federal Government Relations at NFIB. “It is promising to see consumers so firmly appreciate the investment that employers have made in keeping employees healthy, happy, and on the job.”

The Avalere study reinforces what many employers know: Employer-provided coverage helps create a stronger workforce and gives employers valuable benefits to provide to their employees.