How Can Companies Contain Health Insurance Costs?

There are many ways companies can handle skyrocketing health insurance costs while maintaining competitive benefits packages such as considering copayment and deductibles, encouraging preventative care, or removing overpriced providers from their provider lists.

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.

Factors Behind Rising Insurance Premiums for Businesses

A rise in insurance premiums can occur from various factors, such as frequent claims by employees or single claims that are significant in cost. However, premiums are also affected by medical cost inflation, among many other factors.

Advancements in medical technology and pharmaceutical production mean medical procedures and medications are becoming more expensive. Inevitably, these costs are passed onto policyholders in the form of higher premiums each year.

The increasing demand for private healthcare also contributes to the ongoing medical inflation as public health services continue to be plagued by personnel and funding shortages.

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 2024.

How Companies Can Contain Rising Health Insurance Premiums

Companies can employ several cost-containment measures to reduce annual premiums and promote cost savings, such as considering plans with co-payment or deductibles and promoting healthy lifestyles and preventative healthcare.

Cost containment can help businesses maintain expense levels and prevent unnecessary spending. With appropriate measures, businesses can keep their benefits package competitive while making sure the spending is sustainable and not an overburden on the business.

We will discuss the ways companies can contain costs below: 

Consider Plans with Co-Payment or Deductibles 

Health plans with co-payments or deductibles are usually offered at a more affordable rate as the cost of medical care is shared between your employees and the insurer. The higher the copayment or the deductible is, the lower your premium will be.

Co-payment is a cost-sharing technique, where your employees pay a flat fee at the time of the service with the remaining cost covered by the insurer. A co-payment of USD$20 means your employee will pay USD$20 each time they seek medical care while the insurer will cover the rest of the bills.

A deductible is an annual amount of money that your employees need to pay before their insurance coverage kicks in. For example, a deductible of USD$500 means your employees need to pay cumulative bills of USD$500 before the insurance plan kicks in for any coverage.

Plans with high co-payments or high deductibles are usually more affordable as your employees will share the cost of their medical care. They are also useful measures to prevent overutilization and policy abuse.

Refine Your Healthcare Provider List

Choosing healthcare providers in your plan that do not charge extortionate prices may reduce insurance premiums in the long run. As a company, you can work with insurers to remove overpriced providers from your list to ensure your employees receive quality healthcare at a reasonable price.

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.

Consider Flexible Benefits for Employees to Choose

Nothing wastes money like benefits that do not meet your employees’ needs and flexible benefits plans avoid this by allowing your employees to choose the benefits they want the most from the employee benefits package and co-contribute if they want to up their coverage.

Employees who recently started their own family may particularly value high life insurance coverage and options to add dependents. Meanwhile, young employees may value wellness programs to stay fit over comprehensive health check-up plans.

Flexible benefits allow employees to buy up and sell down coverage as they need, saving HR’s time and money in finding a one-size-fits-all plan and empowering employees to choose what works best for themselves.

Encourage Preventative Care Measures

Healthy employees see doctors less and take fewer sick leave days off, which makes a well-thought-out wellness program and preventive healthcare a worthwhile approach to decreasing a company’s healthcare costs in the long run.

By offering coverage for preventative health measures such as vaccination, health screening, or disease management, employers can empower their employees to take care of their health early on and avoid serious illness that may require extensive treatment down the line.

Incentives for a healthy lifestyle could also go a long way in cultivating the culture of health within the organization, for example, a subsidized gym membership, a smoking cessation program, or Employee Assistance Programs.

Healthy employees, physically and mentally, tend to perform better, have better engagement with their jobs, and deliver 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
• What Every Employee Wants from Workplace Wellness Programs

Inform Your Employees About Their Benefits Options

Giving your employees ample information and resources on their benefits package can ensure they fully utilize and make informed decisions on their benefits use. Sometimes, your employees do not fully utilize their benefits package because they don’t fully understand what their benefits entail. 

Apart from information about the benefits package, you may also inform your employees about the different types of care and how to choose the right healthcare providers. This is to ensure they can make informed decisions when receiving healthcare and truly get the healthcare they seek.

Negotiate and Compare Different Insurance Providers 

It’s useful to shop around and compare policies across different insurers before you commit, as most insurers have different policy tiers, with different coverage, add-ons, and premiums for you to choose from. 

If you work with an insurance broker, like Pacific Prime, your broker can help you identify and compare policies that fit your needs from different insurers and negotiate the premium on your behalf. As brokers are not tied down to one insurer, you can be sure your options are impartial and unbiased.

Regularly Review and Evaluate Your Benefits Offering

By regularly reviewing and evaluating your benefits offering, you can spot where your benefits package is doing right and where it can be improved. You may be paying too much for benefits that are underutilized, or your employees are claiming heavily, and you are due for a premium increase.

What Are the Top Non-Monetary Benefits for Employees in 2025

While you are looking to reduce the cost of health insurance in 2024, 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, such as additional paid time off, flexible work arrangements, and more.

On that note, check out our brief list of top non-monetary employee benefits you can offer in 2025:

Additional Paid Time Off

Additional paid time off, such as on a birthday or at the end of a big project, can be extremely cost-effective in increasing your employees’ morale and satisfaction. Employees can use these times to unwind and destress, contributing to their work-life balance and well-being.

Flexible Work Arrangements

Offering flexible work arrangements, such as options to clock in and clock out early or to work longer hours for shorter work weeks, can be more than enough to increase employee satisfaction and empower them at work.

Time Off for Volunteering

Volunteering can give your employees a sense of purpose and personal achievement. By providing time off for volunteering, you contribute not only to your employees’ well-being but also to the greater good of your society. This measure can be combined with your organization’s CSR campaign as well.

Time to Work on Personal Projects

Free time to pursue a work-related personal project can be beneficial both for your employees and your organization. Your employees can expand on their personal pursuits and creativity while your organization can benefit from new innovation or solutions that could be a by-product of the project.

Pacific Prime Can Help Businesses Contain Health Insurance Costs

As an insurance and employee benefits specialist, Pacific Prime can help you design and implement a suitable group health insurance and employee benefits plan for your business.

For more information on what we can offer, visit Pacific Prime’s corporate site or contact our team of experts today!

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Jimmy

Content Creator at Pacific Prime

Jimmy is a content writer who helps simplify insurance for readers interested in international private medical insurance. He is on a mission in Thailand to support locals, expatriates, and businesses by bring the latest news and updates to his Pacific Prime blog articles.

His expert view and wealth of knowledge on insurance can also be found in his blogs for China, Dubai, Hong Kong, and Singapore.

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