The cost of providing health benefits to employees continues to be a burden for many employers that are already struggling with tight finances. Now, more than ever, offering competitive benefits is an important tool for companies seeking to recruit and retain employees, but it is becoming more difficult, as health benefits often account for one of the top three expenses for a business.
As a result, balancing value for employees with cost management can be a challenge, says Joanne Tegethoff, account executive with JRG Advisors, the management company of ChamberChoice.
“As the cost of benefits continue to rise, employers are looking for ways to manage those costs while still remaining an attractive employer of choice,” says Tegethoff.
Smart Business spoke with Tegethoff about some strategies that businesses can employ to offer competitive benefits without causing an undue burden.
What strategies should employers consider?
Voluntary benefits provide a venue for businesses to offer value to employees without increasing their costs for providing benefits. Voluntary benefits allow a company’s employees to purchase insurance and benefit products based on their own personal needs, through the convenience of payroll deductions. And most of these benefits are available on a pre-tax basis to employees.
Employers should consider offering a High Deductible Health Plan (HDHP), in conjunction with a medical savings account such as a Health Savings Account (HSA), as their primary health plan, or as an alternative option. HDHP options include up-front deductibles that must be satisfied before services are covered — minimum HDHP deductibles for 2012 are $1,200 for individual coverage and $2,400 for family coverage. The large deductible results in lower premiums than a traditional health plan, encouraging employees to become more educated consumers by better understanding how health care works.
The reasoning is that if health care consumers — your employees — are spending their own money for care, then they are more likely to question that care and not blindly accept procedures such as unnecessary tests. The system encourages them to do so because, until they reach the higher annual deductible, the cost is coming directly out of their pockets.
Can dependent eligibility audits help curb costs?
It is crucial to conduct dependent eligibility audits to ensure that everyone receiving benefits through your plan is eligible to do so. Most employers have policies and procedures in place that outline plan eligibility for their employees and dependents. If someone is on the plan who is not eligible for benefits, the employer is losing money by paying for their care. By conducting eligibility audits and enforcing policies, employers can ensure that everyone who is on the plan should be.
How can employers make employees better consumers of health care?
Provide education that encourages employees to become smarter health care consumers and take responsibility for their health care costs. Structure your policy in such a way that employees are paying more for more expensive services. For example, show them the costs of visiting the emergency room versus a visit to a doctor’s office or to an urgent care center. Also encourage them to purchase generic drugs rather than brand name when available, and show them the cost benefits of doing so.
Finally, educate them about using mail order prescription refill services, and questioning physicians about treatment options and costs.
What other steps can employers take?
Develop and implement a wellness program. Focus on healthy, sustainable lifestyle changes that employees can make. Emphasize that you are concerned for their health and well-being, and show them how being healthier can both improve their lives and help lower their health care costs, as a healthier work force will ultimately lead to lower health care costs for all.
Offering financial incentives for participation, such as gift cards and reduced health care premiums, can encourage employees to participate. In addition, support from upper management for wellness and employee education is critical. Employee health affects productivity and overall financial performance, so it is in your company’s best interest to encourage employee health and wellness. And a little prevention can go a long way.
How can employers address chronic illnesses?
Implement a disease management program for employees with chronic illness, such as diabetes and high blood pressure. These programs typically include health screenings, blood tests and more frequent check-ups, and many insurers offer these services free of charge or for a minimal fee to encourage healthier behaviors.
Also encourage employees to receive routine preventive examinations, including screenings and check-ups. The goal is to keep healthy employees healthy and ensure that those who are at risk or who have medical conditions are receiving the appropriate care. And many employers host onsite health fairs and conduct onsite screenings or health clinics in conjunction with the insurer, which provides the company-sponsored health benefits.
Finally, offering customized benefit statements that show employees how much you pay for health care costs can be eye-opening. Cost transparency can lead to employees making more economical decisions about their health, along with an increased appreciation of benefits provided by their employer.
Talk with your adviser to learn how to begin making these cost containment strategies part of your long-term employee benefits strategy.
Joanne Tegethoff is an account executive with JRG Advisors, the management company of ChamberChoice. Reach her at (412) 456-7233 or [email protected]