What Can Employers Do to Lower Health Insurance Costs?
Health insurance coverage is not only a hot topic for employees, it is also a significant part of an employer’s annual budget. With health insurance rates rising each year, it is imperative for employers to take measures to lower their overall health insurance costs. KFF found that in 2021, the average health insurance cost for employers was $16,253 annually, or 73% of the premium, to cover a family and $6,440, or 83% of the premium for an individual.
How can a company manage costs and still provide great benefits?
The approach is two-fold; educate employees on proactive wellness activities to manage their care, and utilize tax-advantaged and other programs such as FSA, HRA, and HSA accounts with a high-deductible health plan.
Evaluate if your healthcare plan is working
The first thing an employer should do is evaluate the needs of their employees. The unfortunate reality is that plan use data is not available for groups under 100 lives, which puts small businesses at a huge disadvantage.
We recognized this challenge and developed a solution called Beacon by TPA Stream to evaluate any group of any size to determine how their plan is being used. Using these healthcare claims insights, your benefits advisor, or broker, can confidently evaluate how the plan is being used and make actionable recommendations, and qualify your group for stop-loss insurance, an important insurance type to help make self-funding your plan a reality.
With Beacon, your broker can recommend a plan that fits your specific needs, custom-built for you with the knowledge of how the plan will be likely utilized.
We can connect you to a broker who is using Beacon or you can learn more here.
Consider implementing pre-tax accounts
Arranging pre-tax accounts for employees with FSA, HRA, and HSA accounts helps to put the employee in the driver’s seat. Similar to an employee saving in a retirement fund, an employee can select a specific amount to set aside from their paycheck (pre-tax) that can be used to fund their health spending accounts and allows them to use on approved medical expenses.
Often, an employer will couple a high-deductible tax plan with a health spending account to offset the out-of-pocket costs for an employee. According to SHRM, HR professionals report that offering consumer-directed health plans (CDHPs), particularly high-deductible health plans, is one of the most successful strategies for keeping costs down.
Start wellness programs
Another method employers can use for lowering health care costs is by including employees in proactive health initiatives such as wellness programs. According to SHRM, 70 percent of healthcare spending results from behavioral or lifestyle choices. Many employers offer incentives for employees achieving certain wellness goals such as receiving an annual physical or for partaking in a smoking cessation program. The goal of including employees in the wellness process is to encourage proactive attention to health concerns that may arise before they become a larger issue.
Data is a powerful tool to lower your costs
The best place to start is with a full evaluation of your group’s plan needs.
When your broker connects you to Beacon and evaluates your group, you can expect a lower cost and a plan that fits your specific needs, custom-built for you with the knowledge of how the plan will be likely utilized. We can connect you to a broker who is using Beacon by TPA Stream or you can learn more here.
- The Employer’s Guide to Self-Funded Health Insurance
- Self-Funding: What’s Claims Data Got to Do With It?
- Healthcare Claims Data Is Becoming Expectation… And Is Possible