One source of frustration for many business owners is the process of renewing their benefits, particularly as costs increase year after year. Annual benefit rate increases are common across all companies. However, agents aren't responsible for increases. They merely relay the cost increase when the carriers are actually behind them. This is why it's essential to understand that the only way to decrease costs is to implement a more strategic plan.
If you want to experience relief from some frustration when renewing employee benefits, the following are some tips to control costs.
1. Shop Around for the Best Health Insurance Plans
To get the best possible deal with your health insurance plan, take some time to shop around before settling on a specific plan. If you want to simplify this process, there are a few ways to compare plans to help narrow down your selection.
Generally speaking, health plans are available in four categories: Bronze, Silver, Gold, and Platinum. Each of these categories differs in the way businesses and plans share costs, but they don't pertain to the quality of care. It's also important to consider the different kinds of costs associated with each plan. These costs include the monthly premiums that business owners pay to insurers and individuals' out-of-pocket costs when receiving care.
There are four main types of plans and networks, including EPO, PPO, POS, and HMO. While some plans will give you the option to freely choose doctors and facilities, not all of them will. Some plans may provide limited options or charge people more for seeking treatment with out-of-network care providers.
Keeping these factors in mind can help you determine which plan is best based on your needs and your employees' needs.
2. Offer a High Deductible Health Plan
Another way to help manage health care costs is to enroll in a High Deductible Health Plan (HDHP). With the help of one of these plans, you may be able to pay a lower monthly premium with a higher deductible. This means that you would pay more for health care services before the insurance plan begins covering expenses.
HDHPs need to have both a minimum deductible and a maximum for out-of-pocket expenses. These will be different from plan to plan.
3. Combine a High Deductible Health Plan with a Savings Option
Although you can save money with the help of a High Deductible Health Plan, you may want to combine it with a tax-free Health Savings Account (HSA). With both an HDHP and HSA in place, you will be able to pay the HDHP plan's deductible and other qualifying expenses with money saved in your HSA.
Ultimately, if you have an HDHP and don't require many health care services, an HDHP alone may suffice. However, if you need more care, you can save more with the help of an HSA. Remember that an HSA carries over from year to year, enabling individuals to save more funds to cover later treatment.
4. Offer an FSA
In addition to HSAs, you could also offer Flexible Spending Accounts (FSAs) to reduce out-of-pocket costs for employees while employers benefit from lower overall costs. The cost is low for employers because it's offset by the employer's tax savings, which is because employee payroll deductions are taken before taxes. In turn, employers won't need to cover the tax portion of Medicare and Social Security.
Health Care FSAs — These FSAs enable employees to use funds toward deductible expenses, co-pays, and other qualifying health care items and services.
Dependent Care FSAs — Funds in these FSAs can go toward certain dependent care services, which may include child or adult daycare, after-school programs, or summer day camp.
Transportation FSAs — Funds in Transportation FSAs can help cover work-related commuting costs, including parking.
5. Consider Partnering with a PEO
To help further offset the benefits costs on an annual basis, you may benefit from working with a professional employer organization (PEO). These organizations can work with you to handle many HR responsibilities, including benefits renewal, along with a wide range of other administrative tasks.
The right PEO will help you select the ideal benefits package to offer employees. In addition, outsourcing HR services could help with everything from payroll and human resources to legal compliance and compensation. You'll then be able to redirect your focus on running your business while connecting with a live HR professional to assist with all administrative needs. Subsequently, you can spend less time on the renewal process and more time growing your business.