Budgeting for Employee Health Benefits Without Skimping on Coverage

Quick Look: Between the COVID-19 pandemic and the subsequent Great Resignation, the past few years have brought huge shifts, including a rise in healthcare costs and changing medical needs, which have transformed the workplace and left companies trying to keep up. Rather than approaching benefits in the traditional way, brokers are taking a closer look at how to help their clients best budget for employee health benefits while continuing to provide what’s necessary to stay competitive.

Rising healthcare costs mixed with unforeseen medical needs have created new budgeting considerations when it comes to employee health benefits. With medical procedures and regular doctor visits delayed in 2020 due to pandemic shutdowns, there was a temporary decrease in healthcare costs for employees who were fully insured. However, in 2021, there was a slow return to normalcy, though new virus variants impacted company healthcare budgets due to deferred claims.

Now in 2022, the shuffle of demand and usage, cost and coverage all contribute to a growing need for budgeting in a new way. Brokers must consider the constant changes in medical care as they help their small- and medium-sized business (SMB) clients stay flexible and assess customized cost-saving strategies to regulate their employee health benefits budgets.

Optimizing healthcare costs

Second to employee salaries, healthcare benefits are considered one of the most expensive costs for a company, though they are also one of the most important investments for attracting and retaining top talent. In 2022, employers anticipate the average cost of healthcare to increase by 4.7% with the total average employer cost totaling an estimated $13,360 per employee. Several factors affect cost including:

• Insurance carrier
• Insurance plan type (HMO vs. PPO)
• Provider network
• Plan features (i.e. deductibles, copays, out-of-pocket costs)
• Location
• Employee demographic
• Employer contribution amount

By working with a professional employer organization (PEO), brokers can guide their clients toward cost-saving solutions in many of these areas while still remaining competitive within the workforce. And while inflation and price fluctuations are inevitable, there are ways to help control the cost of employee health benefits from year to year. It requires finding a balance between sourcing plans which mutually benefit SMB employers and their employees.

Focus on preventative care

Year-round employee engagement addressing preventative care is one of the best ways to manage healthcare costs. Employees who schedule regular primary care visits, receive recommended vaccinations, and prioritize healthcare screenings can prevent hospitalizations and other high-cost treatments in the future.

However, over the past few years, research shows a decline in preventative care visits due to the rising costs of healthcare. One study shows an increase from 38% to 46% of adults who went at least a year without visiting a primary care provider. Therefore, in addition to education and encouragement about receiving preventative care, presenting affordable healthcare options is a deciding factor prompting employees to continue regular check-ups.

Integrate health benefits

Both job candidates and employees expect comprehensive health benefits as part of a competitive compensation package. This includes, at a minimum, medical and dental services with many wanting pharmacy, vision, and employee assistance programs included as well. Integrating employee health benefits is a win-win since it offers an improved level of care for employees as well as cost savings for employers.

However, since not all integrated benefits plans offer the same value, brokers working alongside a PEO can compare policies and uncover hidden costs to provide SMB leaders with the best possible options to meet their budget needs and maintain employee satisfaction.

Include virtual healthcare

The mass acceptance of virtual healthcare has created convenience for employees while also keeping healthcare costs down. Often, providers may charge more for in-office visits versus scheduling telehealth appointments. Also, telehealth meets people where they are instead of having to take time to meet with a primary care provider.

When lower-cost services like telehealth are available, employees are more likely to choose lower-cost plans. The result? Potentially lower premiums and lower claims costs, depending on the type of healthcare benefits offered by the employer. Lower costs and greater convenience also encourage regular preventative care to treat conditions before they reach a more severe, higher-cost stage.

Offer employee wellness programs

As with preventative care best practices, maintaining lower healthcare costs is often attributed to lifestyle choices among employees. Employee health benefits can cover many areas customized to what the company desires most. According to an SHRM Employee Benefits Survey, the most common wellness benefits include digitally delivered employee wellness tips, onsite seasonal flu vaccinations, and comprehensive employee wellness programs.

Wellness programs regularly include annual health risk assessments and wellness coaching. They may also cover incentives like gym stipends, nutritional and weight loss programs, as well as company-sponsored sports activities and mental health support. Providing information and accessibility to a range of wellness activities relevant to the workplace demographic encourages healthy behaviors and fewer healthcare claims.

Offer hybrid plans

In general, considering the workplace demographic is always valuable when choosing a cost-effective plan. The one-size-fits-all approach no longer applies to today’s average employee. Introducing hybrid or customized plans, such as pairing a health savings account (HSA) with a high-deductible plan, will help employees find what fits their current needs. Being attuned to what employees want and will use can help forecast and optimize healthcare costs when budgeting and ensure employees have the coverage and personalization they desire.

Sourcing the Right Solution for Your Clients

Partnering with a PEO like ExtensisHR gives brokers an extra edge to the services they offer and helps cement strong client relationships. By combining HR expertise with a customer-centric approach, finding budget-friendly employee health benefits becomes much easier.

Following the ebb and flow of healthcare costs and navigating workforce changes to consistently meet employee demands requires full-time attention and support. ExtensisHR’s PEO solution alleviates the burden of tackling all HR responsibilities, including payroll and compliance, as well as handling benefits, which gives SMB leaders time to focus on business growth.

Connect your clients with a team of HR experts who are dedicated to customizing an employee health benefits solution and proactively addressing all their HR needs. Contact ExtensisHR today.