To control health care bills, many employers either reduce their workforce or replace them with part-time employees, who aren’t eligible for health care. This might seem a way out, but it sure is temporary. Learn how to curb employee health care costs without reducing or replacing the organization’s employee strength.
Did You Know?
According to a survey conducted by Aon Hewitt, 30% employers will see an increase of 4% to 7% in health care costs between 2011 and 2015, mainly because of inflation and the struggling economy.
It sure has become extremely difficult for most employers to afford health care for employees in this struggling economy. According to the Kaiser Family Foundation, the prices of the employer health insurance premiums rose by 50% between 2000 to 2005. Hence, to curb the increasing expenses, many employers either opted for cheap health care plans, or completely stopped employee health benefits, without realizing the pros and cons of either decision.
No employer wants to be this harsh, but the high volatility of the market has made things difficult. The cost of health care and its coverage have skyrocketed, and the only way employers can handle these expenses is by providing health care benefits with higher premiums. This also means putting a major share of the burden on the employees by increasing co-pays. However, there are certain things that employers can do that will reduce health care costs without increasing any financial burden on the employees. Given below are a few suggestions that every employer can use. Apply them, and ensure that the inflow of cash is greater than the outflow.
Reducing Employee Health Care Costs
Starting a Great Wellness Program
Starting a new wellness program, or revamping the existing one is a great way to reduce health care costs. Healthier employees don’t take sick leaves, which improves overall productivity and also reduces health care claims. Wellness programs also save money by targeting serious health issues like blood pressure, obesity, and smoking. Their regular health checkups also helps prevent disease relapses to a certain extent.
Engaging Employees in the Wellness Program
A great way to make employees more health conscious is to reward them for healthy behavior. Employers can offer to pay 50% or even 75% of health care premiums for employees who can maintain a healthy BMI (Body Mass Index) or keep their blood pressure in control for a considerable period. Gifts such as dinner coupons, free gym memberships, and electronic gadgets can be given or gifted to employees who are physically active, and keep their health in check for a longer period.
Using Different Health Care Plans
Most companies use a single health care plan to cover all employees. The health chart of every employee is different, and hence, he/she might require individual health plans. Therefore, it is essential for the employer and the health care carrier to provide a wide range of health plans at various cost levels to their employees.
Avoiding Spousal Coverage
An employee surely benefits when the organization also pays a premium for the spouse and kids to be covered. However, in various instances, it has been noticed that the spouse, if working, has also been covered by a health care plan provided by his/her employer. In such scenarios, it is advised that the employer should refrain from covering the spouse, if he/she already has health care coverage. This practice can surely save the organization a decent amount of money, and avoid potential health claims.
Hiring a Professional Employer Organization (PEO)
A Professional Employer Organization (PEO) usually works for various small and mid-sized employers by providing them the opportunity to offer Health Insurance, Payroll, Human Resource, and various other services that large corporations offer to their employees. As a PEO works for multiple clients, it is able to offer services at a lower cost, resulting in savings for everyone.
Hiring Only Nonsmokers
Before taking this extreme step, ensure that discrimination against smokers is not illegal in your state. This measure might sound a little controversial, but according to the Centers for Disease Control and Prevention (CDC) smokers cost the government an approximate USD 193 billion annually, as a result of low productivity and various health care expenses. Some employers have also implemented additional fines on smokers to balance their premiums.
Spreading Awareness about Medical Emergencies
Health care costs are exploding. The average rent for an emergency room visit is over USD 2,000, and with the various Health Care Acts in the process, the costs are only going to go higher. In such an environment, employers can easily reduce their health care expenses by spreading awareness. Clinics, pharmacies, and various medical institutions offer infinite number of emergency care facilities and hotlines, that prove to be a better option than running to the ER for a minor headache.
These are some effective ways through which employers can curb unnecessary medical expenses. Inflation is never going to stop, but certain steps can be taken up to reduce unwanted expenses.