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Health benefits costs are almost certainly going to rise in 2021. They’ve been trending upward for years — more than 50 percent in the last decade, according to the Kaiser Family Foundation — and the current state of economic uncertainty over COVID-19 won’t slow things down. Realistically, after enduring months of business closures and managing exhausted workforces, many employers will be lucky to maintain uninterrupted operations. That’s why it’s critical for employers to think about reducing health costs right now — figure out cost-effective benefits first so money can be shuffled as needed later. Having a solid plan for reducing benefits costs in 2021 will better position organizations facing limited budgets.
Here are five cost-reduction strategies employers should explore:
1. Dig Into Health Costs
Employers don’t let themselves overpay for the materials they use during production, so why is health care any different? Employers should look into every health care figure they can, from overall premium costs to individual employee expenditures. Understanding where money goes can help focus cost-cutting efforts.
For instance, if employees are going to the emergency room for every health visit, employers know they must promote more health literacy among their workforce.
2. Embrace Technology
The health care landscape of today is starkly different than the one of even a few years ago. Now, the name of the game is virtual health care or “telemedicine.” There are numerous ways for individuals to take charge of their health care without the hassle—and added cost—of in-person consultations.
For example, there is tech that can monitor glucose levels to help diabetic employees without test strips; there are virtual visits available for doctors, psychiatrists, and other health professionals; and there are countless wellness apps that can help individuals make proactive health choices.
3. Consider Alternative Plan Options
Not every plan option will work for every organization. For years, PPOs were the standard, but now high deductible health plans with savings options are having their moment. These plans enable greater health consumerism and put decision-making power into employees’ hands. Employers should consider offering mechanisms like HSAs, FSAs, and HRAs to help shift costs without compromising health care quality.
4. Require Active Enrollment
Some organizations allow employees to passively enroll in their health benefits. This may seem like a nice time-saver, but it can actually hinder employee health literacy. Instead, employers should require active enrollment among employees. This approach would force employees to review all their benefits options each year before making selections. Not only does this make employees consider important life events, but it also affords them an opportunity to reevaluate the benefits they’re paying for and potentially not using. Ultimately, active enrollment can make employees wiser health care consumers, improve proactive health care, and lower overall health expenditures.
5. Change the Funding Structure
Another, more drastic, cost-cutting strategy is changing how health plans are funded. Most organizations use a fully insured model, where employers pay a set premium to an insurance provider, but that’s not the only option. For some employers, self-funding, level-funding, or reference-based pricing models may be more attractive solutions.
Suffice it to say, there are a variety of ways that employers can structure their health plans—even if that means requiring employees to seek insurance in the individual health market.
GTM makes it easy for our clients to optimize their open enrollment process. isolved‘s user-friendly interface offers a more engaging and intuitive benefits enrollment experience while users navigate step-by-step through the benefit enrollment process, driving up employee engagement and usage. You can schedule email alerts to make sure enrollment deadlines aren’t missed. And you can structure specific benefit enrollment welcome messages while easily attaching important benefit documents for employees to review and acknowledge. Request a free quote to learn more.
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