This time of year, a large number of employers find themselves contemplating their employee benefits packages as they approach open enrollment and the beginning of a new plan year. The goal for most companies is to lower costs and improve employees’ overall health something that is far too often easier said than done.
As health care premium increases continue to surpass the rate of inflation, both employers and employees are suffering. Health care costs have risen to the level that employers are forced to closely examine their benefits offerings. Unfortunately, their concerns are not limited to just costs.
At most companies, employee benefits programs look very different from how they did five years ago. Even if the plan offerings have not changed, employee cost sharing is probably different, administration is likely more complex and insurance carriers may have changed. Every year, as employers react to increasing costs and complexity, somewhere along the line, the benefits program can drift from its original intent.
Health care costs have risen almost 10 percent annually since 1998. Employers cannot afford the rising costs and employees cannot take much more cost shifting. Some companies have been forced to cut benefit plans or reduce costs in other areas of the company. Proactive companies are scrutinizing health care costs in the same manner they scrutinize any other business expense. They are being strategic in their offerings and demanding employee accountability within the health care cost equation.
“Add to this the current state of the economy and it’s no wonder recent studies show a rise in stress-related illnesses that result in more health care usage and, ultimately, increased health care costs,” says Amy Broadbent, the vice president of JRG Advisors, the management company for ChamberChoice. “Trying to combat this vicious cycle is difficult.”
Smart Business spoke with Broadbent about employee benefits and ways to lower health care costs while improving employees’ health.
How can employers help offset rising health care costs?
Employers must be more creative than ever as double-digit increases are predicted to continue. Projections indicate employers will continually contribute less toward health care premiums, but they need to find a way to support a reasonable portion of these costs in order to retain quality employees and attract new employees. Strategic planning and the implementation of cost-containment strategies are more important than ever.
Should employers educate their employees about health care?
Absolutely. Employers have to do more than adopt consumer-directed health care plans and increase employee contributions. Implementing upfront deductibles and plan design changes is not enough. Education and communication are key to changing the employee approach to health care and what is often an ‘entitlement’ mentality.
Employees need to be encouraged to take expenses into consideration before electing medical procedures. If they haven’t done so already, employers should begin to take the following steps toward education: provide online tools that enable employees to estimate health care expenses and encourage them to ‘comparison shop’ among facilities and providers; be upfront with employees and tell them how much you spend on health care benefits this information is always eye-opening for employees; reinforce the use of generic versus brand name drugs and the fact that doing so can save both of you money; remind employees to take advantage of nurse hot lines and/or ‘mini-clinics’ that are able to diagnose and treat rather than going to the emergency room for non-emergency situations. All of these types of reminders should be shared on a regular, ongoing basis.
How does workplace wellness tie into this?
Workplace wellness initiatives are one of the most effective cost-containment strategies. The healthier the employees, the more favorable the health care utilization and plan usage. Reward employees for good health behaviors by offering financial incentives to those who participate in workplace wellness programs and take advantage of preventive benefits.
Some employers structure employee premium contributions based on whether or not employees participate in wellness programs (those who do not have to pay a higher contribution). On-site screenings and ‘wellness fairs’ enable some preventive benefits to be brought to the workplace, making it easy for employees to participate. Health goals can also be achieved with friendly interoffice campaigns geared toward weight loss, exercising and healthy eating. Motivate your employees to take action and everyone will reap rewards.
How do voluntary worksite benefits work?
Voluntary worksite benefits are another effective cost-containment approach that enable employees to pick and choose benefits based on personal and family needs. Popular worksite voluntary benefits include accident coverage, cancer insurance, life and disability benefits, automobile and homeowners insurance, and long-term care. The employee, most often through payroll deduction, pays for the voluntary benefits. Because the employer ‘sponsors’ the plans and allows them to be offered at the workplace, employees reap the advantages of ‘group’ discounts, reduced or limited underwriting, and discounted premiums.
Work with an adviser and take time to ensure that you are saving money wherever and whenever you can. Being creative and implementing strategic initiatives can help you reduce costs and improve the health of your work force.
Amy Broadbent is the vice president of JRG Advisors, the management company for ChamberChoice. Reach her at (412) 456-7250 or email@example.com.