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What should employees do when companies cut healthcare benefits?

With skyrocketing medical costs, employers nowadays are getting more concerned over their insurance budgets, especially within companies which offer more lush insurance plans that include dependent benefits, as well as dental and vision coverage. While companies strive to retain top talent and increase employee engagement with the right mix of benefits, we at Pacific Prime have noticed that the pendulum has swung back in recent years for many businesses, in face of the ever-rising insurance premiums. This means that companies are cutting back on, instead of enhancing, their employee benefits programs.

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In this feature, Pacific Prime will examine the most common cost containment approaches companies undertake insurance-wise, and what your options are as an employee.

How do companies reduce their employee healthcare benefits?

In a recent survey conducted by consulting firm Mercer, it has been stated that companies are offering more health benefits than ever before. However, up to 86% of surveyed companies have expressed concern about increasing medical costs, and over half of respondents (57%) are seeking cost-containment measures, including the implementation of panel arrangements, and cutting back on employee wellness programs.

Individualizing healthcare benefits

Some human resources experts deem that employee insurance is actually a form of salary. Hence, instead of applying an ‘one-size-fits-all’ insurance plan to all workers, companies can secure individualized insurance plans according to the performance of employees. As a result, staff with better productivity will enjoy more comprehensive benefits, which can serve as an incentive boost for employees and ease the financial burden to companies.

Cutting dependent benefits

Using Hong Kong as an example, almost 70% of companies there provide outpatient, inpatient, and dental coverage to dependants, and around 95% of those companies provide equal coverage to dependents and employees.

However, it is not uncommon for insurers to increase limits around spousal coverage, if they do not cut such benefits altogether. They may do so by imposing a surcharge to cover a spouse, limiting their participation in the insurance plan, or rejecting coverage outright if the spouse has access to healthcare benefits through their own employer.

In Hong Kong, however, employers are trying to keep staff happy by actually providing as much coverage as they can. More companies are providing maternity, dental, and medical check-up benefits, as well as critical illness benefits, to employees, and dependent coverage is also becoming more common.

Reducing the scope of coverage

Some companies may exclude dental, vision, or disability coverage, as well as life insurance, from their existing employee benefits program.

In addition, some companies go even further and cut out outpatient coverage, leaving only the most basic in-patient benefits.

Introducing plans with high-deductibles or co-payments

High-deductible and co-payment insurance plans mean that employees have to shoulder more responsibility for their own healthcare costs. High-deductible plans usually have lower premiums, but employees have to foot a portion of the medical bills before submitting any claims. Co-payment takes place often when employees require certain prescription drugs in their medical treatment. You may read more about deductibles and co-payment here.

Implementing financial incentives to waive coverage

Some companies offer cash compensation to employees who waive medical and prescription drug insurance.

Workplace wellness programs

Companies provide financial incentives, through lower premium sharing for participants, in order to protect their employees’ health in the long run.

What should you do when your company cuts healthcare benefits?

While having fewer healthcare benefits is certainly not good news for employees, it doesn’t necessarily mean you have to hand in your resignation letter right away. Below are a few suggestions to you:

Maintain communication with the company

Try to talk to the HR team and see whether there are any other ways to cut down on the insurance budget. For example, if they seem intent on cutting a benefit entirely, you may persuade them into introduce plans with a higher deductible or co-payment, so that both sides can get a bit of what they want and achieve a win-win situation.

Purchase health insurance for yourself

The beauty of self-insurance lies in flexibility and autonomy. You are free to include or exclude any benefit items in or from your insurance plan, or ask to impose co-payments on certain benefits. You may even pay a higher premium to increase your coverage limits. Besides, you can also compare prices among different insurers to find the insurance solution that best matches your needs, versus being bound to a company-selected plan and insurer.

You can also talk to your broker about a top-up insurance plan, which can combine with your existing company-sponsored insurance to creating a holistic insurance solution that is ideal for your needs.

Seek professional advice from Pacific Prime

No matter whether you are looking for insurance plans for yourself or for your company, Pacific Prime has you covered. With over 18 years of experience and nine offices around the world, we specialize in a wide variety of insurance products, including employee benefits and group insurance. Our team of specialists know the ins and outs of different insurance solutions, and can fight for the best term and price for you. Contact us today for impartial insurance advice, an obligation-free quote, and a plan comparison!

Senior SEO & Content Marketing Lead at Pacific Prime
With over 13 years of experience in bilingual content creation and digital marketing, Anthony Chan is a seasoned writer and editor for Pacific Prime and its subsidiary, Kwiksure. Leveraging his deep understanding of local and international insurance landscapes, he crafts a diverse range of online and offline articles, reports, e-newsletters, videos, and more.

His expertise encompasses a broad range of areas including international health insurance, employee benefits solutions, motor insurance, life insurance, and various other forms of general insurance. This breadth of knowledge enables him to distill an array of complex insurance concepts into a series of progressive, easily understandable articles.

Anthony earned his Bachelor of Arts degree from Lingnan University, majoring in Translation and minoring in English. He also studied at West Virginia University in the United States as an exchange student.

When he’s not working, Anthony can typically be found on the badminton court, in the gym, or at the theatre.
Anthony Chan