Four Keys to Reducing Employee Health Care Costs
Posted on Monday, March 04, 2019 Share
Now that the Supreme Court has decided the King v. Burwell case, it looks as though the Affordable Care Act is here to stay.
Meanwhile, the employer mandates began to take effect in 2015 for big employers having at least 100 full-time employees or equivalents — and spread to even more employers in 2016 as the ACA's mandatory coverage requirements impact certain smaller employers. These mandates, combined with widespread premium increases from major carriers in many states, have prompted employers nationwide to look for ways to limit the cost of employee health care.
Here are some of the most effective ways companies can help stem the ever-increasing costs.
Implement a Wellness Program
Johnson & Johnson, the well-known pharmaceuticals and household goods company, implemented a comprehensive employee wellness program between 2002 and 2008, and measured the results. Its program was set up to provide both incentives and assistance to workers to exercise, lose weight, quit smoking and lower their blood pressure. As a result, the company estimates that they saved as much as $250 million in health-care-related costs compared to the decade before.
Converted to a return on investment figure, Johnson & Johnson estimated that every dollar spent on the program generated savings of $2.71.
There are many forms such a wellness program could take, including outsourcing smoking cessation and weight loss programs and diabetes management programs to in-house exercise programs. Some companies are providing cash bonuses to employees who meet their personal health care objectives, including weight loss goals, body mass index, body fat percentage, blood pressure levels and any other metric you care to select.
For the best buy-in and best results, it may be a good idea to open programs to family members as well as the employees. Your company saves on their health care, anyway, and family involvement can significantly boost participation in the program.
Consider Telemedicine Programs
Telemedicine leverages technology to help deliver health care advice and certain kinds of diagnostics and follow-up care much more efficiently. This means lower costs and less time for employees out of work going to medical appointments. In many cases, employees can take care of a follow-up doctor visit via Skype or similar technology. The cost per visit is often a fraction of what an office visit would be.
Offer an HDHP
"High-Deductible Health Plans" (HDHPs) are specifically designed health care plans with relatively substantial minimum deductibles. Costs below the annual deductible threshold are absorbed by the employee, rather than the employer, which means the company sees immediate savings.
But the worker gets some benefit, too. Employees eligible for HDHPs may also be eligible to make tax-deferred contributions to health savings accounts. Assets in these accounts grow tax-deferred, and expenditures on qualified health care are tax-free. These essentially give employees an incentive to manage costs and provide a way for them to pay for health care with pre-tax dollars.
Employers can and often do choose to contribute to workers' HSA accounts on their behalf, as an additional employee benefit.
Move Employees Toward Managed Care Plans
Managed care plans find efficiency and savings by relying on a relatively narrow network of care providers, who agree to discount prices in exchange for a steady stream of business from the plan. Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs) are proven money savers in many instances. All things being equal, the more workers you can move to HMO and PPO plans and away from indemnity plans (that is, where the insured pays a set percentage and the insurance company pays the remaining percentage), the more you will usually save in benefits costs.
Call Your Broker or Agent
The health insurance market is competitive. Carriers are always competing with one another to attract group health care plan business. They are also constantly streamlining their offerings and coming up with innovative programs designed to improve services, reduce costs, or both. If it's been a while since you've shopped around for the most efficient health coverage for your employees, you may be pleasantly surprised by what's out there. Your insurance or employee benefits broker can help you explore your options and often help make substantial improvements.
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Disclaimer: The information contained in Dulin, Ward & DeWald’s blog is provided for general educational purposes only and should not be construed as financial or legal advice on any subject matter. Before taking any action based on this information, we strongly encourage you to consult competent legal, accounting or other professional advice about your specific situation. Questions on blog posts may be submitted to your DWD representative.