Benefits are a cost of doing business, and that cost can be very high for smaller companies. In most cases, your benefits will go up every year, and they may go up faster than your other expenses or, worse, your income.
At the same time, reducing benefits can result in low employee morale and can even cause key talent to quit. Some cost-cutting measures, such as dependent audits or spousal surcharges can be particularly unpopular and potentially discriminatory. So, how can you control your annual benefit increases without excessively impacting your employees?
Switch to a High Deductible Health Plan With a Health Savings Account
Done correctly, the combination of a HDHP and HSA can significantly reduce your costs without dramatically increasing the health care costs of your employees. While it does shift some costs onto your employees, the fact that the HSA can be used for dental and vision costs and over-the-counter drug copay often makes up for that.
HSAs are also portable, meaning they can take them with them when they leave, and provide tax advantages. The account grows tax-free and rolls over. Choose the high deductible health plan carefully, as some have very high deductibles, such that the benefits almost never cut in.
Focus on Wellness
The more your employees spend on healthcare, the more your premiums are likely to increase. Providing a wellness program can automatically lower your premiums, but it has other benefits as well.
First of all, workers appreciate wellness programs, especially Millennials and Generation Z. This means a good wellness program can attract higher quality talent to your company.
Second of all, a properly designed wellness program with appropriate incentives improves the overall health of your workers. The CDCreviewed 56 published studies of worksite health problems and discovered that employees could save 25% on not just health care costs, but reduced absenteeism and workers’ compensation claims.
Design your wellness program around the needs of your workers. A discount gym membership is only good if people actually use it. It's also important to actively encourage employees to get routine medical care and checkups, as this reduces long-term costs.
Health education is a key part of a wellness program too. Make sure that employees know their health risks and what screenings they need to get.
Choose Your Plan Carefully
It's not just a matter of choosing a good plan, it's a matter of making sure it fits your employees’ needs, and being flexible as things change over time.
A few things to look at:
Does your plan encourage the use of generic prescriptions and cheaper options where possible? In most cases, generics are cheaper and make absolutely no difference to the employee concerned.
Do they cover telemedicine when reasonable? The cost of telemedicine visits is typically lower.
Do they offer a nurse advice line? A nurse advice line can eliminate unnecessary doctor's visits by helping employees make a more informed decision about whether they need to go in.
Do they have a sensible out-of-pocket maximum? If your workers are generally healthy, they are not likely to hit the out-of-pocket maximum, so you can often get away with raising it.
Another thing to watch for is underutilized benefits. This might be either an opportunity to save money by cutting those benefits out or something to consider with your wellness program and encouraging proper preventive care.
Educate Your Employees
Last, but not least, it's vital to educate your employees about their benefits. For example, if you have mental health coverage, but your employees assume that you don't, then they will not use it, not benefit from it, and absenteeism is likely to remain high.
Giving multiple plan options and properly educating your employees to choose the right one for them is good if you can afford it. For example, younger employees can save costs and save for the future by choosing a HDHP with a HSA, while older employees with higher immediate costs may not find this option works for them.
Make sure that your employees know how their benefits work and what is covered. This will reduce underutilized benefits and overall encourage behaviors that are both supportive of health and reduce costs.
You can reduce your benefits costs without reducing the coverage provided to your employees. For most companies, this means offering a HDHP with HSA as appropriate, focusing on employee wellness, improving employee education, and carefully choosing your plan.
One way to make this easier is to partner with a Professional Employer Organization. A PEO can handle annual renewals, answer your employees’ questions, provide documentation, and handle your open enrollment period. They also have a wealth of knowledge about not just available plans but wellness programs and other things which might help you reduce costs.