Quick Look: Saving on healthcare costs while speaking to the needs of the modern-day worker is the balance every company wants to achieve. But what happens when the inevitably of inflation threatens to undermine the value of benefits employees receive? Fortunately, brokers can spearhead the healthcare conversation with their clients to help alleviate concerns and swiftly navigate changes and challenges to continue incentivizing today’s top talent.
Inflation affects every area of business including employee healthcare benefits and costs. Small- and medium-sized businesses (SMBs), in particular, are feeling the squeeze of sky-rocketing pharmacy expenses, the high-cost structure of large healthcare systems, as well as the myriad of wellness benefits employees want today.
Globally, the U.S. has the highest health expenditure per capita among with individual healthcare costs totaling over $12K annually. Although inflation is a determining cost factor, the decrease in the number of independent medical providers also changes the scope and cost of care. When there are fewer choices of where to receive healthcare services, the lack of competition diminishes, allowing healthcare companies to raise their costs.
When there’s a shift in the economy, people want to know how it directly affects them. To help SMB leaders make sense of the changes to healthcare costs and how to continue offering premium benefits to their employees, here are answers to many frequently asked questions to help with future planning.
How much does inflation affect healthcare costs for employees?
To put the increase into general dollar amounts, PPO plans were projected at $6,516 by the end of 2021 for individual coverage and $28,256 for an average family of four. This represents an increase of approximately $500 and $2,000 respectively.
How to keep employee healthcare benefits affordable?
Although healthcare benefits are still deemed valuable for employees, it’s become increasingly challenging to maintain their affordability. Additionally, the cost of health insurance plans continues to rise with less coverage and/or the flexibility employees seek.
Fortunately, brokers who partner with a professional employer organization (PEO) for health benefits provide an even greater value to SMB leaders. PEOs leverage their collective bargaining power to secure lower rates for health insurance, retirement plans, etc. This helps keep costs down for the employer and offers better plan choices at better prices to attract and retain employees.
What other factors are raising the increase in healthcare costs?
Long-term factors like salary increases and pharmaceutical prices will continue to rise over the years. Meanwhile, short-term situations, such as the shortage of nurses and the surge of new therapies and medical technology, also carry over to increase the cost of healthcare. Furthermore, the increase of prescription drugs has made a significant impact on healthcare expenses. Drug prices have increased by 33% since 2014, with many consumers price-comparing healthcare plans based on the most affordable medication.
Will integrating benefits help save money?
Many times healthcare benefits involve different providers for medical, dental, and prescriptions costs, in addition to mental health and wellness providers. A potential cost-saving solution is to integrate healthcare plans to provide a greater quality of care for employees while also streamlining the enrollment and claims process.
However, not all integrated plan benefits offer the same advantages. Brokers should provide clients with enough information to make an educated decision about what they can afford and what provides the most value for their company.
How to determine the right healthcare plan?
One of the best ways to achieve optimal value from employee healthcare benefits despite inflated costs is to confirm plans meet a company’s current needs. It’s best to review healthcare coverage with SMB clients on an annual basis and determine if it’s still applicable to the current workplace demographic. Limit wasted benefits by choosing flexible healthcare plans which can meet the needs of many rather than a one-size-fits-all solution.
What type of low-cost health services are available?
Medical technology combined with public need has created a necessity for telehealth which wasn’t as prevalent before COVID-19. Virtual care has created greater accessibility and convenience for patients to receive the health services they need at the time they need them. No more missing time from work to drive to appointments or feeling limited within their network due to being confined to one particular location.
Consequently, the rise of telehealth is also a win for SMB owners since most telemedicine services are included in standard plans with the convenience of virtual health services typically adding no extra cost for employers. Meanwhile, employees often opt for high-deductible HSAs and lower-cost plans when telehealth is available. The result: lower premiums and claims costs. Offering health plans providing 100% coverage for preventative services helps reduce the likelihood of paying higher expenses for severe conditions and costlier treatments.
What role does company culture play in lowering healthcare costs?
Inflation is inevitable, but it doesn’t mean there aren’t options for SMBs and their employees when seeking affordable healthcare. One proactive way to offset rising healthcare costs is to create a healthy culture. Employees often choose a health plan that best fits their budget and lifestyle by anticipating their medical needs. Therefore, when they’re healthy, they feel more confident choosing a lower-cost plan.
Companies can be proactive by promoting healthy behavior in the workplace through employee wellness program benefits, such as gym membership stipends, onsite exercise facilities and/or class opportunities, hydration stations, healthy snacks, and walking clubs or group outdoor events to boost culture and inspire team members to stay healthy.
Support SMBs with Comprehensive HR Services
Brokers maintain strong relationships with SMBs by calling on other experts to help meet their clients’ needs. Give your clients access to as much knowledge and resources available to make quality benefits decisions.
By working hand-in-hand with a PEO, like ExtensisHR for PEO benefit services, you simultaneously fulfill your clients’ costs objectives for healthcare plans and deliver a comprehensive HR solution customized to suit their needs. We offer your clients the opportunity to focus solely on their company growth and operations by passing the responsibilities of all things HR and benefits administration to HR experts ready to help.
Want to learn more about the value of partnering with us? Contact ExtensisHR today.