Today’s guest post is brought to you by a proud 2016 OKHR State Conference sponsor, Hub International!
In today’s rapidly changing workplace, building a cost-effective benefits plan is essential. To meet this objective, companies need to determine an overall cost-savings goal.
Once you have determined your overall cost-savings goal, there are a number of ways to redefine your employee benefits plan structure to better manage costs. Here are nine cost containment strategies that companies can implement.
The Top Nine
|High Deductible||2% through lower annual premium increases – it allows employers to reduce costs while motivating employees to carefully consider how and when to access health care services|
|Self-funding||8-9% in annual premium increases – growing increasingly popular even with smaller organizations|
|Telehealth||5-to-1 return on investment – it enables the delivery of care at a lower cost than the traditional health care model and reduces unnecessary emergency room visits and urgent care services|
|Reference-based Pricing||Up to 20% of total medical claims – it promotes comparison shopping by establishing caps for selected services that have a wide-range of prices from providers|
|Voluntary Benefits||Reduction of the annual 8-9% premium increases down to 0% – they supplement fixed plan options and can include hospital-stay expense coverage, dental, vision, disability and life insurance|
|Pharmacy Benefits Management||20% for an expense that typically comprises 20% of overall health care costs – to curb the steep rise in pharma costs in recent years, a pharmacy contract management company can renegotiate new terms, including better contract provisions, discounts and rebates|
|Narrow Networks||6-17% annually versus a total network of providers – under narrow network plans, 99% of health care costs are covered when in-network providers are utilized; these providers have track records for the highest quality of care and have proven over time to deliver it at a lower cost|
|Defined Medical Contribution||5-10% savings on annual premium increases – it allows organizations to directly manage costs and encourage employee plan selection and ownership; it can be coupled with an employer exchange shopping technology solution or steering employees toward a public exchange environment|
|Metallic Spectrum Product Plan||Avoid the $3,000 per eligible employee penalty the IRS will levy on non-compliant affordable plan options; multi-plan benefits options or a metallic spectrum of plans – silver, gold, platinum – is a way of serving a wide range of employee needs, budgets and concerns, and reducing the potential of over-insuring the healthiest employees|
The Big Three
Along with the nine benefit cost reduction strategies, when realigning a benefits plan, a company should also review the three Cs of cost management.
|Cost Management Review Item||Question to Ask|
|Consumerism||Do you want your employees to be smarter health care consumers and make better decisions that bring down the total cost of the benefits?|
|Choice||Do you want to offer more options to attract and retain employees without increasing your total benefits costs?|
|Control||Do you want to reduce financial risk and create long-term, sustainable cost savings?|
As organizations look at their balance sheets this year, one area that will undoubtedly undergo intense scrutiny is employee benefit costs. It is a notoriously difficult item to manage due to the increasing cost and utilization of health care, not to mention ACA compliance burdens. HR and finance managers need to take a longer view and commit to developing a multi-year strategy instead of relying on short-term tactics to contain costs.
A multi-year plan incorporates plan design, administration, funding, contribution, and health management strategies to deliver savings of up to 30 percent.
Better Benefits Management
While each strategy holds the promise of lowering the cost of your benefits plan, the key is finding the ones that best suit your organization’s culture and employee needs. For a more in-depth look at employee benefits cost management, download this eBook.
Be sure to check out HUB International at the 2016 OKHR State Conference!
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