When a small business owner looks at the cost of offering health benefits, the question is usually: “What does this cost me per month?” But the more important question is rarely asked: “What does it cost me when employees leave because I don’t offer competitive benefits?”
The Real Numbers
Replacing an employee costs, on average, 50–200% of their annual salary when you factor in recruiting, onboarding, training, and lost productivity. For a $50,000/year employee, that’s $25,000 to $100,000 per departure.
Health benefits are consistently cited as one of the top three factors in employee retention decisions, alongside pay and flexibility. In competitive job markets, candidates actively compare benefit packages — and turn down offers from businesses that don’t offer health coverage.
Benefits vs. Salary Trade-offs
Many employees prefer better benefits over marginal salary increases. A $200/month employer health contribution is often more valued than an equivalent pay raise, because the health benefit is pre-tax for the employee while the raise is taxable income.
The Recruiting Angle
Small businesses without health benefits compete at a structural disadvantage against companies that offer them. A strong benefits package levels the playing field and can attract candidates you’d otherwise lose to larger competitors.
Putting It Together
If a group health plan costs you $500–800 per employee per month, but preventing one turnover saves you $25,000+, the math isn’t close. Benefits aren’t a cost center — they’re a retention investment.
If you’re a small business not yet offering health benefits, or offering a plan you’re not confident in, open enrollment is the right time to change that. Talk to Garden State Benefits — we specialize in making group coverage work for small businesses.