Any organization that provides health care as an employee benefit has felt the sting of rising health care costs.
Depending on the size of the organization, and the census of employees, those annual increases can be very high.
In 2016, the average annual premiums for employer-sponsored health insurance were a staggering $6,435 for single coverage and $18,142 for family coverage.
And, in 2017 it is projected that employer premiums will increase an average of 6% more to insure their employees.
Employers are looking for ways to reduce health care costs because many have seen the cost of family coverage more than double since 2001.
There are many contributing factors to rising health care costs – many of which an employer can’t control. However, there are things employers can do to help minimize what they pay to provide health care to their workers.
7 Ways to Reduce Health Care Costs
As with any other business expense, it is important to take the time to negotiate pricing with health care vendors. To do this, solicit bids from at least three vendor so there are comparisons to look at.
Three bids will give you a range of options that you can compare. This should be done annually to ensure that your organization is getting the best coverage for the lowest cost.
With the current health care reform debate going on, insurance carriers are interested in controlling the rising health care costs and want to provide the least expensive option possible.
2. Increase Deductibles
When looking at vendor proposals, look at deductibles and play with different scenarios to see how a change in deductibles would lower the monthly costs.
For example, ask the question – how would the premium change by increasing deductibles from $250 to $500 a year or $1,000 to $5,000 a year? You may be surprised how much you can save merely by raising the deductible.
3. Self-funding Employee Deductibles
While this is not for every organization, some may want to explore self funding the employee deductible. This option is for organizations that want to help employees keep great coverage but lower the monthly premiums.
What it means is taking on a much higher deductible, which greatly lowers the monthly premium. Then taking that difference in premium and put it in a fund to cover the costs of the deductible for employees.
You can then use an outside administrator to manage the claims for employees.
The employee coverage will stay the same but this self-funded model can potentially save thousands of dollars per year.
Again, this model is not for every organization but for the right candidate it can save significant dollars in annual health care premiums. Talk to your health care vendor for creative ways to reduce health care costs.
4. Educate Employees
The old saying, “you don’t know, what you don’t know” is so true. Employees should understand the painful truth of what their employer is paying for health care.
Employees need to understand the employee benefit they receive and the cost of providing that benefit.
Take the time to have a conversation and educate employees on the cost of insurance premiums.
The sticker shock affect is very valuable in helping employees appreciate the true cost of health insurance.
5. Share The Cost
If your organization is not doing this already, have employees share the cost of the monthly insurance premium.
Most organizations ask employees to pay a percentage of the monthly premium. This can be anywhere from 21% to 35%. It simply depends on the organization and its benefit and compensation strategy. The average employee contributions for health care coverage is 27% – but varies greatly by state.
Participating in the cost of premiums helps employees take ownership in the cost of health insurance, and accountability for making health care service decisions.
6. Health Risk Assessment
A health risk assessment is another valuable tool that can be used to educate employees.
My husband and I had a health risk assessment done in the last year and it was eye opening to get a “score” on our health and healthy lifestyle.
While we scored pretty well, there were still things we learned that influenced some behavior changes in our health choices. Healthy employees make a healthy insurance census which can impact health care premiums.
7. Wellness Program
Developing a wellness program can also positively influence employee lifestyle changes which can result in lower health care costs.
A wellness program can help employees learn how to participate in their own healthy lifestyle. This could include education on disease prevention, a health coach, on-site health center or something as simple as developing a lunch time walking program. The goal is to get employees up and moving and understanding how lifestyle choices can affect their health.
For example, I quit smoking years ago and was greatly concerned with gaining weight. Around the same time, my employer started a lunchtime walking program. The program made it easy for me to walk away from one bad habit and form a new good habit. I have been walking consistently ever since.
At the end of the day, it is each of our individual responsibilities to make healthy lifestyle choices.
Unfortunately, not everyone has the option of being healthy; some people get sick with illnesses well beyond their control. It is for those people that health insurance is so important.
But imagine how health care costs could drop if those of us who could control our health would take ownership and responsibility to maintain a healthy lifestyle!