Businesses large and small face an annual cost increase that seems to always outstrip the rise of inflation, typically by at least two to three times that rate. Health care costs may be the most significant year or year cost increase for businesses, a cost that can be difficult to control. With smart thinking, employers can put into place several strategies for managing business health care costs, including one, two or three of the following.
Choose Higher Deductibles
With health care costs rising at double-digit figures annually, businesses must find ways to contain costs. One way to do this is to have employees take an increasingly greater share of cost, by increasing the annual deductible from $200 to $500 or more. A $1,000 deductible may be steep, but for a family of four or more it can still be affordable for employees.
Employees may balk at having to pay higher deductibles, but businesses can trim premiums by as much as one-quarter to one-half. Higher deductibles also will encourage employees to think twice before using health services except when absolutely needed. Routine and emergency visits are still covered, but the employee will understand that she plays a greater part in containing the rise in costs going forward.
Businesses can also offer tiered plans as allowable by law. For instance, executives and other high-value employees may be covered under one plan and the remaining employees covered under another plan. You can still offer medical, dental, vision and other coverage, but the plans can differ depending on the employee’s position or responsibilities.
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Raise Employee Contribution
Few businesses these days offer health insurance without requiring employees to shoulder some of the burden apart from a deductible. In the past two decades, companies have called on employees to contribute more per pay period in order to continue receiving a similar level of coverage.
Your business can contain costs by asking employees to pick up a greater share of your health care premiums. For instance, if employees have been paying $50 per pay period for health care, you may be able to raise it to $60 or more without cutting services. You may also be able to find savings by modifying what is covered too — medical and vision might be standard, while a cheaper dental insurance plan is brought on to contain costs.
Cut Back on Services
Another strategy for companies is to simply look for a cheaper health insurance plan elsewhere or choosing a scaled down version with the same health insurance provider. Either way, companies will offer a less costly plan, although the benefits will be scaled back here.
A word of caution when offering less instead of maintaining your coverage: for some employees, access to quality and affordable healthcare is critically important, something that can spell the difference between staying on the job or moving on. Thus, you risk losing some employees, perhaps your most valuable workers. Those losses can cost you far more than the savings you could realize by changing your insurance coverage, therefore weight this option carefully before moving forward.
Waiting for Obamacare
By 2014, the full provisions of the Affordable Care Act will kick in, with business owners making decisions on how best to approach this plan. Also known as Obamacare, the ACA requires businesses with 50 or more employees to offer health insurance, leaving smaller businesses with the option of offering coverage or not. Some companies may choose to drop healthcare coverage completely, opting to pay a fine to the federal government that may cost less than offering insurance directly. In any case, companies will have most of 2013 to consider what options are available, perhaps allowing some businesses to put off a cost-cutting plan for one more year.