As a small to medium-sized business, choosing to offer group health insurance can be a large expense. Smaller organizations naturally have smaller budgets with fewer internal management resources at their fingertips. Sometimes, smaller organizations don’t even have enough employees to meet participation requirements for group health plans. If you offer employee health care plans, you have probably noticed a steady increase in costs.
In 2020, single and family health care premiums increased 4%, while wages increased 3.4% and inflation increased 2.1%. In the past ten years, the average family health care premium has increased a whopping 55%. Companies are always seeking ways to reduce employee benefits costs, especially without changing health care plans.
In the United States, health care insurance is treated as an employee benefit. Employers can take advantage of providing health care to their employees by treating health insurance as a tax-deductible business cost. In turn, employees receive health insurance benefits free of tax. Rising health care costs have forced many employers to get creative to continue to provide health insurance to their employees. Here are some ideas you can implement to lower your company health care costs without changing plans:
Ways to Manage Health Care Coverage Costs
Promote Health Care Consumerism
When employees make informed choices daily, their overall health care costs will be reduced. This so-called health care consumerism is an inexpensive way for employers to work toward a reduction of overall health care costs. Employers can use education to turn ordinary employees into savvy consumers by creating transparency in the health care process. When employees know how much a procedure or appointment costs, they tend to make choices with regard to treatment. Employees also tend to cooperate more with treatment and rehabilitation recommendations if they have skin in the game.
Implement Consumer-directed Health Plans (CDHPs)
A CDHP is a plan that lets the employee decide on health care and the kind of coverage that best fits their needs. Most often, a CDHP uses a health reimbursement arrangement (HRA). An HRA is an employer-funded benefit used to reimburse employees for out-of-pocket expenses for medical expenses and health insurance premiums. HRAs come in several forms and there is one specific to smaller organizations. Encouraging employees to make good decisions about health care and spend money wisely translates into overall savings for the organization. Another benefit of a CDHP for the employer is that it makes budgeting easy.
Encourage Employee Wellness
Healthy employees spend less on health care. Behavioral and lifestyle choices made by employees can affect as much as 70% of their overall health care spending. Without spending a lot of money, employers can offer small incentives and communication as a strategy to engage employees. Promote healthy and active lifestyles. Try a monthly step challenge in exchange for a drawing for a massage. Encourage employees to track their food or water intake in exchange for a company-sponsored lunch. Offer meditation and relaxation sessions to improve mental health. Other ideas include reimbursement for fitness memberships, flu shot clinics, rewards for smoking cessation, rewards for monthly health education seminars and more. There are endless opportunities for employers to promote healthy living. This strategy is a win-win. The employee gets healthier and the health care savings cost is passed on to the employer.
Shift Costs to Employees
While no one likes to hear that their health care plan is going to cost more money, the increase is inevitable. For employers to save money, sometimes they have to shift costs to the employee. One option involves charging more for spousal coverage when the spouse has available health care coverage through work. This technique is tricky. Employers should balance the savings with the potential for negative employee reactions before putting this plan into action.
Help Keep Staff Members Healthy and Happy
These are just a few suggestions on how your organization can lower health care costs without changing plans. There may be other ways your organization can save money. Have a broker review all the different ways the employer and the employee can contribute to the cost of health plans. Doing this on an annual basis can result in potentially lowering costs.