In the same way that the cost of health insurance takes its toll on the average family, it also takes a toll on business owners who provide health insurance to their employees. There are a few ways that employers may go about cutting down on the cost of providing health insurance. Some of these ways are beneficial to the business, but potentially harmful to the employees, while others are more creative ways in which both the employer and employee can benefit. Let us take a look at some of these measures that companies can adopt to reduce the cost of health care for their employees.
Beneficial for Employers Only
- Increasing the cost to employees. Raising the proportion of insurance premiums that the employee pays is the clearest and most obvious way that businesses mitigate the growing cost of health insurance. By increasing the employee’s contribution toward their insurance per pay period, the amount that the employer has to pay is, of course, less. This option leaves the coverage intact while cutting costs for the company. However, this can also place a large, unexpected financial burden on the employee, which will have an effect on morale as well.
- Limiting access to expensive drugs and doctors. Another common option when it comes to looking for ways to lower a company's health care expenses is by removing doctors that charge more than others from the network of approved providers. Excluding high-priced doctors would restrict employees to only seek care from less expensive, in-network doctors. Not having to pay doctors as much cuts costs for the business, but it also limits the number of options employees have when it comes to choosing their physician. Employers also can control access to expensive drugs, only allowing coverage for it in certain situations. The price for cutting costs this way is that employees may lose coverage for medications that they believe they need.
Beneficial for Employers and Employees
- Health and Wellness Incentives. A more innovative cost-cutting option is offering rewards or incentives to employees as they take steps to live a healthier lifestyle. These steps could include preventive care, participating in weight loss programs, or joining an exercise group. When an employee becomes healthier, they become a lower risk to insure. Becoming lower risk also lowers insurance costs. Incentives are a definite win-win situation, as the employee not only improves their health, but also needs less medical care, which in turn costs the company less. Possible incentives could be reduced health insurance premiums, monetary awards, or even contributions to the employee's Health Savings Account.
- HSAs. A Health Savings Account, or HSA, is another method that promotes lower health care costs for the employer. In correlation with a high-deductible insurance plan, a health savings account is set up for employees to make tax-free deposits that can then be used for medical expenses at the employees’ discretion. Some companies will provide a stipend for their employees to put into their HSAs, and others will match employee contributions up to a certain percentage. Either way, encouraging employees to use their HSA helps them to take a role in the decisions regarding their health care, which promotes more responsible choices.
The unfortunate truth is that, just like almost everything else, the cost of health care is increasing. The need to cut costs for businesses providing health insurance to their employees has become more urgent for companies than ever. We have seen that while some companies may take severe measures to accomplish this, there are less burdensome options as well. Ideally, businesses will begin taking advantage of some of these more creative ways to bring their expenses down, so that companies can keep employee morale high while reaping the benefits of lowered insurance costs.
Questioning your latest health insurance premium increase? Contact Skyline Risk Management, Inc. at (718) 267-6600 to competitively shop your business's health insurance.