How Employers Can Cut Employee Benefits Cost

Today, many employers make health plans and benefits decisions blindly, even if it’s a big-spending for their business. On the other hand, employees know how expensive their healthcare costs are, but they have little to say in what plans their company will offer them. At the end of the day, you and your employees share one common goal: lowering healthcare costs. 

Every employer is looking for a way to cut their employees’ benefits costs, but it needs to be done carefully in case it hurts the employees. However, the good news is, it is totally possible to cut your company costs while actually improving the benefits you offer to your employees. This article is a guide to how employers can cut employee benefits costs whilst still providing a great service for their team. 

Medical Plan Design

Switching to high deductible health plans (HDHPs) is one of the most popular ways to control the cost of benefits and healthcare these days. It is widely used by employers as it can reduce the cost of medical premiums while pushing up deductibles. However, it takes time and effort to introduce and explain this to multiple employees, since out-of-pocket expenses and traditional health plans flow very differently. 

In the absence of an explanation, some employees may elect an HDHP to save on premiums while there is another plan that is perhaps more appropriate for their particular situation. Plus, HDHPs are not for everyone, as employees with chronic conditions or extensive health histories, for example, may not be satisfied with this plan because it may cost them more in the long run. That’s why it’s important to fully explain the plan when introducing it so that your employees can have an informed view. 

Group Health Insurance

Group health insurance is one of the fastest-growing choices to cut costs for employers, as it offers many benefits that are superior to other options. When your company purchases a health care insurance plan, you agree to pay a monthly fee called a premium to the provider. In exchange, the insurance company shares a portion of your employee’s medical costs as they need them. The experts at this site explain that group health insurance offers a cheaper premium for employees as it often has lower rates than individual health insurance plans. The reason for the cheaper cost is because it spreads the risk for insurance companies over the group members, which makes them confident that they won’t have to pay out a lot of money for medical bills, thus the lower premiums. Group insurance also lowers your cost as an employer significantly, since it is often 100% tax-free. Plus, having an attractive insurance plan can also help you to attract more talent as healthcare cost is a primary concern of many employees. 

Pharmacy Plan Design

Pharmacy benefit costs are one of the very growing parts of healthcare expenditures, and this trend looks set to continue. However, it’s possible for brokers and pharmacy benefit managers (PBMs) to work together to bring down the costs by adjusting formulas, which are the categorization included in the insurance plans. This act also brings down long term employee benefits because they can achieve better treatment outcomes with the appropriate medications. Employee benefit costs can also be cut through diligent claims processing, rebate reimbursements, policy adjustments, clinical programs, and drug utilization review, which can save both money and lives. It is important to notify employees about any formulary changes in advance, as it can affect people’s medication regimens. 

Switching Medical Carriers

Employers often “shop their plan” every year through a bidding process to find the most attractive insurance package for their employees. However, you can encourage competition to strive for the best price by bidding out insurance plans on a semi-regular basis – or when your provider offers an unreasonable renewal plan. However, it’s important to remember that putting plans out to bid too often can cause considerable drawbacks, such as negating potential future value the employer could have realized. Additionally, you can also manage “rate creep” by negotiating multi-year contracts as well as attaining some extra benefits from your carrier. 

During any given year, there may be changes in your personnel, and some may have medical emergencies while others may recover from the previous costly medical experience. Whatever the case, getting an optimal healthcare plan can help benefit your organization in maximizing earnings, saving money, and maintaining competitive benefits to attract talents. It’s important to keep in mind that the effort to cut employee benefits can be problematic if you ignore other hidden costs in the process. However, it pays to keep insurance companies on their toes, compare multiple healthcare plans, and make changes to benefit your business with careful research.