Quick look: Healthcare is consistently cited as the most expensive employer-sponsored benefit and costs continue to rise. Resource-strapped small and medium-sized businesses (SMBs) are feeling the squeeze. Here are five ways you can help your SMB clients contain healthcare benefit costs without reducing coverage.
In today’s competitive marketplace for top talent, small- and medium-sized businesses (SMBs) recognize the need to develop more robust healthcare benefits as a means of attracting and retaining employees.
Per a recent study by LIMRA, brokers are watching clients upgrade benefit offerings—or risk losing out on quality employees. According to one broker quoted in the study, “I have heard of companies where 25 people just walked out the door because the company across the street offers a more robust package.”
However, healthcare has always been the most expensive employer-sponsored benefit, and the average per-employee cost of health insurance jumped 6.3% in 2021. For businesses still trying to recover from the disruption of the previous two years, every dollar counts.
Here’s how you can help your small business clients control healthcare costs.
Offer an HSA/high-deductible option
High-deductible health plans (HDHPs) enable employers to shift some of the financial burden away from upfront premium costs. These plans can also be advantageous for employees, due to lower monthly paycheck deductions.
According to Healthcare.gov, “For 2022, the IRS defines a high deductible health plan as any plan with a deductible of at least $1,400 for an individual or $2,800 for a family. An HDHP’s total yearly out-of-pocket expenses (including deductibles, copayments, and coinsurance) can’t be more than $7,050 for an individual or $14,100 for a family. (This limit doesn’t apply to out-of-network services.)”
Adoption of these plans is rising. The Kaiser Family Foundation recently found that as of 2021, close to one-third of covered workers in the United States were enrolled in a high-deductible health plan (HDHP)—a sharp increase from 10% in 2010.
Some best-practice suggestions for implementing a quality high deductible healthcare plan include:
- Offering health savings account (HSA) contributions which let employees use pre-tax dollars for certain medical expenses
- Providing ongoing education covering the retirement and tax-free advantages of HSAs
- Covering preventive care medications pre-deductible (within HSA federal regulations)
- Paying employer HSA contributions at the beginning of the year (instead of incrementally throughout the year) to reduce out-of-pocket costs for employees
- Offering additional HSA contribution incentives for completing wellness programs
Implement wellness programs
Preventive care protects employees and saves money in the long run. Per Kaiser Family Foundation, 58% percent of SMBs surveyed offer an employee wellness program in at least one of these areas: smoking cessation, weight management, and behavioral or lifestyle coaching.
Busy employees may require prompting to take advantage of employer-sponsored wellness programs or those available through their health plan. Encourage your SMB clients to develop wellness programs that align with their staff’s needs and desires by soliciting feedback from staff about the programs that matter most to them.
Unfortunately, too many employees fail to take full advantage of wellness programs because they aren’t willing to take time off work—or feel they lack support from their employer for health screenings. As a broker, you can urge SMB leadership to provide paid time off (PTO) to encourage employees to take advantage of these health-promoting resources.
Per a recent LIMRA survey, only 47% of workers surveyed feel their employer communicated their medical/health insurance benefits “very well.” Lack of understanding leads to underutilization of benefit plans and can create frustration among employees.
As a broker, you can help by proactively providing tools and resources to help your SMB clients communicate the full depth and scope of health benefits and help employees easily navigate their options.
Live or on-demand webinars, quick-read one-sheets, in-person or virtual “lunch and learns” and registration walk-throughs connect the dots for employees who may be unaware of their full benefits or who have questions about how to utilize coverage.
As always, remaining available via email, phone call or text message demonstrates to your SMB clients that their staff is a priority, as well as letting employees know support is just a phone call (or a few clicks) away.
Look at utilization rates
Every workforce has unique health and wellness issues. Look at the services your clients are actually using and search for trends and patterns. For example, a high rate of ER usage might suggest a need for improved access to care or education about lower-cost alternatives such as urgent care or telemedicine.
Awareness of which services employees are using most—and which are of less importance—can help inform the options you present to an SMB employer during renewals. SMBs have less financial leeway than their bigger business counterparts, so every dollar invested in a health plan (on the part of employers and employees) should be directed toward services that resonate with that particular workforce.
Partner with a PEO
Many SMB employers simply can’t achieve the level of benefit savings under small group plans that they can when coming under the large-group plan umbrella of a PEO. This group pricing delivers immediate cost savings and may even enable employers to offer a wider scope of benefits for the same—or lower—investment.
In addition to the cost savings, the HR experts at a PEO can provide all the support and education listed above. This alleviates some of the time demands on brokers while ensuring your SMB clients receive immediate answers and ongoing attention.
Brokers may be hesitant to work with a PEO due to fear the company will eventually compete or edge out the broker. PEOs with broker-centric business models like ExtensisHR recognize that brokers are at the center of the client relationship. We do not recognize other “broker of record” letters and will never compete with you. In short, PEO partnership reduces costs for employers, increases attention to employees, and alleviates some of the time drains on busy brokers.
SMB clients are relying on brokers for support
Navigating health plan options can be challenging for time-strapped HR departments at an SMB. Company leadership will look to you for advice on which option is the best fit for their workforce’s needs and their budgetary constraints. Using the guidelines above, it’s possible to help clients contain costs while offering top-notch healthcare to workers who are scrutinizing benefits more closely than ever.
Contact ExtensisHR today to learn more about how our unique, broker-centric business model helps your clients while protecting your working relationships.