Are you feeling the financial squeeze of rising group health insurance costs? You're not alone. According to a recent study, the average annual premium for employer-sponsored family health coverage in the United States has reached a staggering $23,968. As the burden of healthcare expenses continues to grow, businesses and employees alike are searching for innovative ways to reduce these costs without compromising on quality care. We'll explore effective strategies to help you trim your group health insurance expenses and keep your team's well-being a top priority.
Here are some suggestions to help maintain your employee benefit program and protect your bottom line:
- Alter your medical plan design
One of the most common ways for employers to control costs of employee healthcare benefits is to switch plans to a high deductible health plan (HDHP). This reduces the cost of medical premiums, but also pushes up deductibles. It’s important that employees understand the difference with this type of plan, and should be well-informed before making this decision.
HDHPs are not for everyone. Employees with chronic conditions or extensive health histories may not be satisfied with this type of plan because it may cost them more in the long run. On the other hand, employees with little or no health problems may prefer these plans. They may seem more desirable because the premiums are lower and they’re unlikely to max out the deductible through their usual medical needs. Employees who experience catastrophic medical events may also like these plans because they often offer the same or similar annual deductible and out-of-pocket maximums as other plans, for less premium cost.
What’s important for employers to consider is that HDHPs require employee education, so that employees truly understand their options.
- Consider your pharmacy plan design
The high and growing cost of prescription drugs already imposed a financial burden on employees and employers who sponsor health benefits. But, now pharmacy benefits alone account for 21 cents of every healthcare dollar, on average.*(Broker Innovation Lab, 2020)
Pharmacy benefit costs are one of the fastest growing segments of our national healthcare expenditures. The trajectory of these increases is not predicted to subside anytime soon due to trends in the marketplace — most noticeably in the explosive cost increases of specialty drugs and the additional increased cost of generic drugs.
Brokers and pharmacy benefit managers (PBMs) can work together to bring down costs by adjusting formularies, which are the categorization and tiered pricing of prescription drugs included in insurance plans. They can also help bring down long-term employee benefits costs by helping patients achieve better outcomes through greater access to the appropriate medications.
As with HDHPs, however, employee education is critical with pharmacy benefits. It’s very important to notify employees of any formulary changes well in advance, as it will affect people’s medication regimens. Inform your employees early of pharmacy benefit changes so they can discuss these with their doctors and make informed choices.
- Switch medical carriers—Even mid-year
Employers are often under the impression that “shopping their plan” every year through a bidding process is a good strategy for finding the most competitive medical coverage at the best rates. Bidding out insurance plans on a semi-regular basis can be a great strategy for encouraging competition and striving for best price, balanced with the best coverage. Select a plan with a carrier that delivers value from the start, and looks critically at incremental increases, rather than a carrier that offers a terrific “starting” price, but increases rates substantially in year two or three.
It is possible to switch carrier’s mid-year. Many employers mistakenly assume that they have to wait until the end of a plan year to make a switch. If an employer is dissatisfied with current coverage or costs, it is possible to change carriers at any time to alter a benefit plan design or to consider more flexible funding options. There may be restrictions to these changes, so check your current plan for any restrictions or penalties. Even if your carrier permits mid-year changes without penalty, consider all of your options before making a final decision.
- Offer voluntary benefits
Voluntary benefits are a great way to add value to your benefits package without increasing your share of employee benefits costs. Because voluntary benefits are typically funded in their entirety by the employee, the employer is only coordinating the benefit by connecting another carrier to the workforce — they’re not sharing in the cost.
- Institute disciplined wellness programs
Offering a wellness program is a great first step in containing healthcare costs with programs focused on early detection, prevention, and care adherence. Encouraging preventive care, including age appropriate screenings and immunizations, medication and care adherence for chronic conditions can affect costs substantially. Rewarding healthy lifestyles while modifying unhealthy behaviors will deliver sustainable, long-term savings over time.
- Balancing your employees’ health needs with your business’s bottom-line
Keeping your employees’ healthy and on the job is important to your company’s success, and balancing your budget is crucial to your business success. Work with your benefits advisor to find the right balance for your company. By changing plan design and considering alternate funding options, there are options for satisfying both your employees’ needs and your business’s bottom line.
Providing group health insurance is a valuable benefit for your employees, and it can help attract and retain top talent. However, it doesn't have to be excessively expensive. By implementing the above strategies, you can effectively reduce your group health insurance costs without compromising the well-being of your team. These strategies will help you strike a balance between providing valuable benefits and managing your budget wisely.
If you are interested in getting a quote from PHP, contact your benefits advisor or a PHP account representative today.
- Call PHP Sales at 260-432-6690, ext. 840