Estimated reading time: 5 minutes
Any organization that provides healthcare as an employee benefit has felt the sting of rising healthcare costs.
Depending on the size of the organization, and the census of employees, those annual increases can be very high.
In 2020, the average annual premiums for employer-sponsored health insurance were a staggering $7,440 for single coverage and $21,342 for family coverage.
And, in 2022 it is projected that employer premiums will increase an average of 5% more to insure their employees.
Employers are looking for ways to reduce healthcare costs because many have seen the cost of family coverage more than double since 2001.
There are many contributing factors to rising healthcare costs – many of which an employer can’t control.
However, there are things employers can do to help minimize what they pay to provide healthcare to their workers.
7 Ways to Reduce Healthcare Costs
1. Negotiate
As with any other business expense, it is important to take the time to negotiate pricing with healthcare vendors.
To do this, solicit bids from at least three vendors 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 church is getting the best coverage for the lowest cost.
Insurance carriers are interested in controlling the rising healthcare costs and want to provide the least expensive option possible. But they expect employers to help keep those costs down.
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?
Some organizations look at even higher deductibles to save money.
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 take 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 healthcare premiums.
Talk to your healthcare vendor for creative ways to reduce healthcare 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 healthcare.
Employees need to understand the employee benefit they receive and the cost of providing that benefits.
Take the time to have a conversation and educate employees on the cost of insurance premiums.
For instance, create a benefit-cost document for each employee to see what the ministry pays for insurance and other employee benefits.
That document might look something like this:
Health Insurance Cost Breakdown
| Ministry Contributions | Employee Contribution | Total Insurance Premiums | |
|---|---|---|---|
| Single Coverage | $5,580 | $1,860 | $7,440 |
| Family Coverage | $16.006 | $5,335 | $21,340 |
The sticker shock effect 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 benefits and compensation strategy. The average employee contribution for healthcare coverage is 27% – but varies greatly by state.
Participating in the cost of premiums helps employees take ownership of the cost of health insurance, and accountability for making healthcare 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 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 that can impact healthcare premiums.
7. Wellness Program
Developing a wellness program can also positively influence employee lifestyle changes which can result in lower healthcare costs.
A wellness program can help employees learn how to participate in their own healthy lifestyle.
This program could include education on disease prevention, a health coach, an on-site health center, or something as simple as developing a lunchtime walking program.
The goal is to get employees up and moving and understand 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.
We All Need To Take Personal Responsibility
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 healthcare costs could drop if those of us who could control our health would take ownership and responsibility to maintain a healthy lifestyle!
Learn more tips for managing your church by enrolling in our Church Administration Course.
