The cost of healthcare is continuously increasing, and 2022 may be no exception. According to PricewaterhouseCoopers, medical expenses are expected to grow by 6.5% in the new year. Employer health plan premiums are expected to rise more than 5% in 2022, according to a Willis Towers Watson poll.
Employers will want to strategize methods to rein in benefits spending with these increases in mind. Here are 4 strategies to reduce health benefits costs.
1. Consider Changing Plans
Increasing employee costs is one typical way to reduce benefit expenditures for a business. This may be done immediately through premium increases, but it might cause more issues for an employer; after all, many employees are still struggling financially and are ready to leave their jobs for better benefits alternatives as a result of the COVID-19 pandemic.
Given this, alternative plan modeling may be a more methodical approach to reducing expenditures. Employers might consider different healthcare plans that can still benefit workers without having to spend too much money. Plan modeling alternatives include:
- Consumer-driven health plan models — High-deductible health plans have lower premiums than traditional health insurance.
- Self-funding models— An employer-sponsored health plan, rather than a carrier-managed one
- Reference-based pricing models— Set Spending Limits on Shoppable Services: Self-funded health plans with established expenditure limitations
- Level-funding models—Self-funded health plans in which an employer pays a certain amount to a carrier each year and the rest is returned if there is any money left at the end of the year
There are several advantages and drawbacks for each of these plan modeling choices, depending on the circumstances of a company. GBS Benefits, Inc. can help employers understand the potential of these and other plan models.
2. Health Care Education
Employee health care literacy has seen a significant rise in recent years. The objective is for individuals to save money and enhance their well-being by having a better understanding of their available health care options.
Even limited health literacy can significantly lower healthcare expenditures in 2022. Assisting workers with questions such as “How much will this cost?” and “Can I be treated in a less costly but equally effective way?” may assist them in better managing their health choices and making wiser decisions. Employees should be educated about the differences between urgent care and emergency rooms, as well as how to price shop for services.
The more knowledgeable workers are about health-related topics, the more money they can potentially save. In other words, the education employers invest in today will pay for itself later through healthier employees and reduced health costs.
3. Telemedicine Options
Consumers can go to their doctor over the phone or the internet using telemedicine. Surprisingly, it was very popular during the height of the COVID-19 epidemic, when individuals were desperate to communicate with their doctors.
That popularity is unlikely to drop in the following years. Instead, more firms are likely to migrate toward providing more telemedicine options. Only 11% of US citizens used telemedicine in 2019, according to McKinsey and Company. According to a recent McKinsey & Company poll, as of mid-2021, 46% of customers were using telemedicine in place of in-person health checkups that they had intended. In addition, according to a separate survey by McKinsey & Company, 76% of respondents were interested in utilizing telemedicine in the future
Employers who want to experiment with telemedicine options might provide it in a limited way. An employee may go in person for an annual checkup and then follow up with a virtual visit later. If employees find this service useful, employers could consider increasing the extent of their telemedicine services.
4. Prescription Drug Policy Changes
Prescription medications are fantastic supplements to health plans, but they may sometimes raise costs if misused. Employees will need to be informed about their drug plan or else they might waste money on drugs that aren’t needed. An individual may pick name-brand medications without adequate information, for example. An employee who is not familiar with generic alternatives might not even be aware that they exist. This can result in higher costs for both individuals and businesses as a whole.
Employers may also remove needless drug expenditures by changing their policies. This might include requiring staff to initially ask for generic options before getting more expensive alternatives.
There are various methods for managing benefit expenditures, but not all will work for every business. That’s why it’s critical for businesses to thoroughly examine their health plan statistics and see where they spend the most. This will assist with policy formulation and allow employers to optimize their efforts.
Reach out to GBS Benefits, Inc. to discuss cost-saving strategies that will fit your unique workforce.