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Health Insurance in Food Industry
Posted on 9/11/19 at 9:16 am
Posted on 9/11/19 at 9:16 am
We own a commissary kitchen and plan to hire our first employee - a facility manager.
Most of applicants are currently general managers at restaurants.
We plan to offer a salary of ~$55K-$60K and are trying to consider whether we need to offer health insurance to be competitive with the market. With that background I have two questions:
Do most general managers at restaurants receive health insurance?
What are the positives and negatives of not providing insurance through a PEO but rather just paying the employee additional wage to purchase insurance on his/her own through the marketplace?
Thanks for any feedback.
Most of applicants are currently general managers at restaurants.
We plan to offer a salary of ~$55K-$60K and are trying to consider whether we need to offer health insurance to be competitive with the market. With that background I have two questions:
Do most general managers at restaurants receive health insurance?
What are the positives and negatives of not providing insurance through a PEO but rather just paying the employee additional wage to purchase insurance on his/her own through the marketplace?
Thanks for any feedback.
4
Posted on 9/11/19 at 9:32 am to abitaman6363
I don't know anything about PEO, but I have experience with the marketplace. It is shite if you are in a rural area, but in a large city with hospitals and a bigger insurance pool there are some really good deals so location might play a factor. You could also let it be a negotiating point Price it out through the PEO.
I know your chain/franchise GMs are gonna have health insurance. I dunno about small businesses though.
I know your chain/franchise GMs are gonna have health insurance. I dunno about small businesses though.
This post was edited on 9/11/19 at 11:59 am
Posted on 9/11/19 at 9:40 am to abitaman6363
Do you currently have a PEO? That's the first step? Are you an S corp currently or how do you pay yourself? I'm going to assume you don't have PEO or you would have asked them?
I just moved from an LLC to an S corp to pay an employee salary along with myself. But I'd get with your PEO or meet with some PEO's to determine your options there first.
ETA: A lot of it depends on who you will be hiring also. If you are looking for someone just out of culinary school that is young and ambitious benefits won't be as important. If you are talking someone more mature and experienced likely with a family, then benefits will be.
Restaurant industry generally has poor benefits. So no I don't think immediately that would hurt your hiring ability.
I just moved from an LLC to an S corp to pay an employee salary along with myself. But I'd get with your PEO or meet with some PEO's to determine your options there first.
ETA: A lot of it depends on who you will be hiring also. If you are looking for someone just out of culinary school that is young and ambitious benefits won't be as important. If you are talking someone more mature and experienced likely with a family, then benefits will be.
Restaurant industry generally has poor benefits. So no I don't think immediately that would hurt your hiring ability.
This post was edited on 9/11/19 at 9:42 am
Posted on 9/11/19 at 12:23 pm to abitaman6363
quote:
What are the positives and negatives of not providing insurance through a PEO
PEO is a while different ball game, much more than just providing health insurance. They can be great but are pricey.
quote:
but rather just paying the employee additional wage to purchase insurance on his/her own through the marketplace?
Gonna cost the employee in income and payroll taxes (unless you do a gross-up) and it's going to cost you in payroll taxes. But still may be a cheaper option.
Posted on 9/13/19 at 3:02 pm to abitaman6363
You should include health insurance in the compensation package rather than all salary. This will be beneficial for both. By having two people under a "group plan", rates will be around 15-20% less per person than being under an individual policy. You will also be able to pay for you health insurance and 50% of his with pre-tax dollars, then write the expense off as a business expense on your business taxes. I am an employee benefits broker, if you have any questions you can email me. If interested ask for my email and I will provide it. My team and I specialize in 2-50 people groups. 
Posted on 9/14/19 at 5:46 am to tigerforever7
quote:
You will also be able to pay for you health insurance and 50% of his with pre-tax dollars, then write the expense off as a business expense on your business taxes
Wouldnt the employees salary already be pretax dollars and an expense on business taxes?
I understand the benefit of pretax dollars for the business owners health insurance. But wouldnt an HSA accomplish the same result?
Thanks
Posted on 9/14/19 at 7:00 am to meansonny
quote:
Wouldnt the employees salary already be pretax dollars and an expense on business taxes?
I believe what he was trying to say is that as the employer you can give the employee a pre tax benefit that’s worth more post tax. So it may cost you $5,000/ year that’s worth $10,000/ year.
Posted on 9/14/19 at 8:30 am to meansonny
You’re correct, an HSA is funded with pre-tax dollars and would accomplish the same result.
I will word this better. For an employer sponsored health plan, the employer is required to contribute at least 50% towards the employees medical insurance premium. Other options for example dental, short term disability, vision can be 100% financially on the employee. However, with medical insurance in an employer sponsored group plan, the employer is required to pay at least 50%.
So, the employer will pay for his/hers and 50% of employees medical with pretax dollars and write that off, then the employee can pay the rest of his through an HSA (which is pretax dollars). I believe the max per year you can contribute to HSA is around $7,000 per year though.
I believe it would shock you if you show group quotes compared to individual quotes.
I will word this better. For an employer sponsored health plan, the employer is required to contribute at least 50% towards the employees medical insurance premium. Other options for example dental, short term disability, vision can be 100% financially on the employee. However, with medical insurance in an employer sponsored group plan, the employer is required to pay at least 50%.
So, the employer will pay for his/hers and 50% of employees medical with pretax dollars and write that off, then the employee can pay the rest of his through an HSA (which is pretax dollars). I believe the max per year you can contribute to HSA is around $7,000 per year though.
I believe it would shock you if you show group quotes compared to individual quotes.
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