The Connection Between Payroll and Health Insurance

What comes to your mind at the mention of the term insurance? For most people, it is about car insurance and personal medical insurance. What you may not know is that your business needs to be insured, as well.

The moment you started your business, you exposed it and yourself to various risks. Even before hiring your first employee, your business faces several risks, and this makes it critical to get the most appropriate insurance for your business.

A single catastrophic event or a lawsuit can bring your business crumbling down even before it takes off. Most business owners get it wrong from the start – not understanding the link between their business, employees, and health insurance.

Read on to learn more about payroll and health insurance for your fitness business.

Payroll and Health Insurance – Are they Connected?

Health insurance is a form of benefit that you can offer to your employees. It is a strategic approach to recruiting and retaining top talent, promoting wellness and health among employees.

According to the Affordable Care Act (ACA), everybody should have health insurance cover. Thus, when you offer health insurance for your employees, you offer them a platform to comply with ACA's individual health insurance mandate.

So, what's the link between payroll and health insurance?

Auditing annual premiums can be challenging for your business when it comes to worker's compensation. With the rising prices of premiums, your business is likely to face unmanageable yearly audit premiums.

You can opt for a pay-as-you-go arrangement that makes it easy for you during compensation. At this stage, the payroll becomes essential. Syncing your payroll services with your health insurance policy makes the administrative works quite seamless. With such an approach, you handle your taxes, worker's compensation, health benefits, and payroll with ease.

How Payroll is Used in Health Insurance

In the 21st century, you should separate your independent contractors from salaried employees. If you don't, you should be ready to pay a higher amount each year in terms of worker's compensation.

Suppose you have been running your business for some time now. In that case, you might have experienced two scenarios: you paid a higher amount to your workers' compensation insurer at audit, or the policy's rating was significantly high compared to what you have on the books. Whichever way, the vital aspect here is to note how insurance companies use payroll to bill you.

So, how do insurance companies use the payroll?

Often, insurance companies rely on the payroll to calculate to bill you for your workers' compensation at the end of each year.

Here are the elements included in the payroll:

• Commissions
• Bonuses
• Salary
• Overtime pay
• Annuity plans
• Rent cost for a worker with employer-provided house

Some aspects are excluded from the payroll. These include:

• Severance pay
• Tips
• Work uniform allowances
• Food money for working late

Notably, there is a significant difference when it comes to measuring payroll for salaried and contracted individuals. With such information, you know what will be included during the yearly payroll audit to avoid surprises and under-budgeting.

Why Your Business Needs Insurance?

1. Costs Reimbursement

The primary reason why your business needs insurance is because accidents are inevitable. When accidents occur, your business insurance will restore your business to its financial position before the event.

Besides its importance in catering for all the damages following an insured event, the law requires that all businesses have a health insurance cover.

2. Protect Your Employees

Having business insurance offers protection for your employees. In case anything happens to your employees – sickness or accidents – your health insurance cover will compensate for any expenses or losses.

3. Protect Your Customers

The insurance policy you have for your business can extend protection to your customers. However, the cover should be a business owner's policy for this to apply.

Such a cover takes care of business and property liabilities. This policy will cover your business against product liability, bodily injury, advertising and personal injury, and property damage.

Types of Insurance You Need for Your Business

The right insurance policy will protect your business adequately. Every fitness facility needs the following insurance coverage

1. Liability Insurance

A liability insurance coverage protects your business against any events that could lead to harm. Most insurance companies customize this insurance cover to align with your business operations. With such a focus, you can be assured that any events resulting from aspects such as non-performance or mistakes will be covered.

2. Property Insurance

Whether you own or lease the space where you operate, you need property insurance. Such coverage protects your furniture, inventory, signage, and equipment against various events such as theft, storm, or fire.

Destruction from natural events such as earthquakes and floods is not always included under this cover. So, it is advisable to liaise with your insurance provider to customize the policy according to your needs.

3. Business Interruption Insurance

After you have hired your first employee, you will need to add workers' compensation to your business's insurance policy. This policy covers death benefits, disability, and medical treatment in case of an event in the line of duty.

With the fitness business involving much lifting, slip-and-fall injuries could lead to costly medical procedures and medication. Having workers' compensation insurance can save you from such costs.

4. Workers' Compensation

Whereas insurance policies do not always cover most catastrophic events, you can have your business protected against interruptions resulting from such events. This cover protects your business against loss of income because you cannot, for instance, make sales calls or your staff cannot come to work. However, it is important to note that you will be compensated only for the income lost during the event.

Final Thoughts!

As a business owner, you have a responsibility to keep the business running. One way to do this is by encouraging the health and wellness of the employees and ensuring that the business is adequately insured against potential risks.

Get in touch with NEXO Fitness Solutions to apply for the necessary insurance cover to keep your business protected. Whether you are looking for a cover for your workers, gym equipment, or special events, you will find all the fitness insurance solutions you need here! Call now at