How To Manage Employee Benefits As Health-Care Costs Continue To Rise
Unfortunately, health-care costs in the United States only seem to be increasing as time goes on. In 2020, according to CNBC.com, “Large employers predict the total cost of covering health insurance for workers and their families will hit an average of $15,375 in 2020, an increase of 5%, according to a survey by the National Business Group on Health.” With health-care costs soaring, now is the time to make decisions on managing benefits for your employees and their dependents.
Consumer-Directed Health Plans
Two popular and cost-effective options for employers to offer to their employees are Health Reimbursement Arrangements (HRAs) and Health Savings Accounts (HSAs). There are subtle differences between these two types of plans. For HRAs, it is the employer who owns that plan, while HSAs are owned and managed by the employee. Health Reimbursement Arrangements are typically an individual benefit offered to employees. This benefit allows employers to reimburse costs for employees’ health insurance and medical expenses. Typically when you have an HRA in place, employees are offered a monthly allowance of money that is totally tax-free. Employees can use this money that is given to them to purchase and pay their health insurance and medical costs. This type of plan may be of great value to those key employees who play a crucial role in your business or company.
Health Savings Accounts are also beneficial to employees, however, the perks are lesser than an HRA. An HSA account is viewed more as a savings account for health costs. Typically, it is expected that employees will contribute funds to their own health savings accounts, and their employers will typically match their employee’s contributions to a certain dollar amount or percentage. Another requirement that sets this type of policy apart, is that the employee is typically required to carry an existing health insurance policy with a high deductible in order to qualify for an HSA account. Regardless of the type of plan you choose for your employees, keep in mind that your contributions to either type of plan are deductible on your taxes. Curious about which plan is right for your employees? You can learn more about both plans here.
Promoting and Rewarding Employee Wellness
One of the easiest ways to keep employee health costs down is by promoting a healthy and active lifestyle. Many illnesses and health conditions can easily be avoided by making smart choices when it comes to your health. According to SHRM.com, “As much as 70 percent of health-care spending can be attributed to behavioral and lifestyle choices; thus, employers are increasingly offering employees health improvement programs. Numerous studies have indicated that employers can contain or even reduce health-care costs by implementing wellness programs.” Some of the main goals of these programs are to lower healthcare costs for employers and employees, reduce the number of employees missing work, achieve greater productivity, reduce work-related injuries and workers’ comp claims, and of course, boost morale and loyalty among your employees. Establishing a wellness program can be as simple or complex as you would like. The best way to start designing your wellness program is to conduct a general assessment. Start with an employee survey, this can help gauge what types of health goals, interests, and needs they have. Compare your organization to others like it. What types of programs are they currently using? Are there any features of their plan that your employees would like? Your second step would be to gain support from your business’ management and leaders. If they are on board, it is more likely that the employees working under them will be supportive of participating in such a program.
Once the support of your employees is gained, you should form a committee to help manage the employee’s needs and evaluate the successes and failures of the program. You should also have goals and a budget designated before rolling everything out to your employees. To learn more about designing the best wellness program for your employees, read more here.
There are a large number of options for how to reduce and manage costs for your business when it comes to employee health-care. Some are no-brainers, while others may be tougher to go through with.
At the end of the day, it comes down to what your business can realistically afford, while also keeping the well-being of your employees at the forefront of your mind. Learn more about all of the strategies one can use for managing health-care costs here.
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