How can companies contain health insurance costs?
Have you noticed your company’s health insurance premiums going up? If so, it’s because of health insurance inflation and other factors such as the COVID-19 pandemic. Containing the cost of company health insurance will surely be top of mind for you and many other HR and business leaders across the globe.
This Pacific Prime article provides a number of cost-containment measures to help employers contain their health insurance costs while ensuring they can sustain the right level of benefits to meet the needs of their employees.
The rise in premiums for businesses
When it comes to health insurance, both individual clients and companies can always expect health insurance premiums to rise. A rise in premiums may occur due to frequent claims by employees or single claims that are significant in cost. However, premiums are also affected by health insurance inflation, and many other factors, for example, the investment in healthcare technology that helps in the diagnosis and treatment of complex health conditions. Inevitably, these costs are passed onto policyholders in the form of higher premiums each year.
Moreover, we can all agree that the biggest factor of them all has been the impact of the COVID-19 pandemic. Employers across the globe continue to grapple with ever-rising group health insurance premiums and the trend is likely to continue into the foreseeable future, as mentioned in Pacific Prime’s Global Employee Benefits Trends Report 2020.
Cost containment for businesses
Cost containment is the business practice of maintaining expense levels to prevent unnecessary spending. This practice helps to reduce expenses to improve profitability without long-term damage to the company. On the subject of employee benefit plans and health insurance premiums, companies can employ several cost-containment measures that can be implemented to reduce premiums paid each year and promote cost savings. These include:
1. Introducing co-payments
Co-payment is a cost-sharing technique and refers to how health plan costs are shared between you and your employees. In other words, you can offer comprehensive health plans for your employees but not bearing the full cost of it. So when your employees make a claim on the company health insurance plan, you as the employer would pay a flat fee at the time of the service with the remaining cost covered by the employee.
This is also a very good option to include if you are in the process of renewing your plan or setting one up through a broker like Pacific Prime. Not only will you save and improve your bottom line, but you pass accountability on to employees so they think twice about making unnecessary claims.
2. Limiting cover to specific hospitals with lower treatment costs
As a company, you will be better off dealing with hospitals that you know will offer the best care for your employees. More so, choosing healthcare providers in your plan that do not charge extortionate prices may reduce insurance premiums in the long run. A win-win for you and your employees! In general, the costs are lower when you go for in-network medical specialists because insurance companies contract lower rates with an in-network provider.
3. Adjusting benefits to target only those who need them
As the needs of your workforce grow, it’s probably best to move towards employee benefits plans that have components designed to make the company attractive to existing employees and potential talent alike. This also means turning to more flexible benefits plans to better cater to the desires of the workforce during these trying times. That way, employees can choose the benefits they want the most from the employee benefits package: be it health insurance, retirement scheme, a wellness program, or even more time off to care for their loved ones during the COVID-19 pandemic.
Moreover, flexible plans can potentially lower costs without limiting the options and limits employees can choose from. Additionally, to ease the financial burden to the business, employers can consider individualizing healthcare benefits.
For further reading:
4. Introducing a wellness program
Happiness and wellbeing are essential in the workplace as they lower the rate at which employees are off sick. A well-thought wellness program increases employee engagement and at the same time provides a rich culture of health, which has the potential to decrease a company’s healthcare costs. Healthy employees see doctors less and take fewer sick leave days off. They also perform better, and ultimately, yield better results for the employer overall.
For further reading:
- Employee wellness programs: What you need to know
- Key steps for implementing a corporate wellness program
- Creating a wellness program: key questions for all businesses
- What every employee wants from workplace wellness programs
5. Adopting insurtech capabilities
The 21st century has witnessed many technological trends and innovations. There are many ways in which technology is influencing the way employees view their benefits. One interesting area is insurtech – a portmanteau of insurance and technology – which can help businesses reduce expenses like administrative costs relating to employee health insurance plans.
Note: On February 4th, 2021, Pacific Prime successfully acquired the insurtech brokerage arms of CXA Group. This acquisition adds to our existing employee benefits and compensation technology. The technology will help offer global HR teams simplified plan administration across multiple jurisdictions. Also, our trusted experts will be able to leverage valuable insights from data, as well as streamline total rewards management.
For further reading:
6. Utilizing HR tools and systems
HR professionals can access online benefits portals that provide them with information and details of their employee benefits plans. Having this in place means HR managers can focus on other aspects of the business such as training and recruitment. An excellent example is Pacific Prime’s very own bespoke HR database system, Prime Care Portal (PCP). Learn more about the portal from our corporate page.
7. Offering telehealth services to the workforce
Further to cutting down costs is the use of telehealth services or ‘virtual healthcare’ platforms on mobile devices that give employees direct access to medical professionals. Your employees can get medical help and advice without visiting a clinic, while valuable time and money.
What are the top non-monetary benefits for employees in 2021?
While you are looking to reduce the cost of health insurance in 2021, it is also worth noting some of the top non-monetary employee benefits that you can include when reviewing your existing employee benefits plan or package.
On that note, check out our brief top 3 non-monetary employee benefits video to help keep your staff happy.
For further reading:
- 3 key HR trends to follow in 2021 by Pacific Prime
- How can employers adapt to the post-COVID change in health benefits?
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