All employers, from small to large, have grown to expect annual increases in costs for health care premiums. Although these costs have been outpacing inflation every year, they have recently stabilized. Depending on the source, with large employers as an example, the annual increase is anywhere from 3.9 percent (Mercer) to 6.5 percent (AON). The options you as an employer choose will help you mitigate or control your health care costs. We list some of those options for managing rising health care benefit costs and their current trends below:
- Consumer-Directed Health Plan (CDHP) – Responding to employee feedback, employers offering only CDHPs continues to decline steeply. Retaining valued employees may mean offering more choices for their health care plans, including preferred provider organization (PPOs) and similar plans..
- Health Savings Account (HSA) – These medical savings funds are attractive for at least two reasons. First, both the employee and employer can contribute, taking the burden off each party. Second, the tax advantages are appealing because they’re not subject to income tax when deposited. Contribution types vary for HSAs, and this gives you, the employer, more options. As well, it provides incentives for both employee and employer. For example, you may choose to offer anything from predetermined amounts per participation (which most employers do), contributions based on employees participating in programs that will improve or maintain their health, or wage-based account contributions. And there are more options available.
- Telecommuting Employees and Telehealth. With the driving force being managing costs and improving employee health and well-being, many large employers will be expanding the range of telehealth benefits they offer; most will provide coverage for minor and acute services. In fact, according to the Society for Human Resources (SHRM), up to 95 percent of large employers will be offering increasingly more telehealth services within the next two years.
- Decision Support/Claims Assistance. Your employees may face a complicated set of choices when tackling specific health care issues. More and more, employers are upping the number and kinds of support systems they offer to employees. Consider giving your employees more decision-making power; for example, a variable set of options/benefits from which they can select.
- Managing the Cost of Prescription Drugs. According to CNBC.com, data from the Organization for Economic Cooperation and Development shows that Americans are spending an average of $1,200 for prescription drugs every year. There are several reasons for this, but the major one is “costs have gone up because companies are raising the price of drugs that are already available.” What’s missing from this story is the cost of specialty drugs, and this is a cause for concern and alarm. As you tackle your health care benefit spending, ask yourself what you have in place or what you would do if a specialty medication ran into the million-dollar category for a single employee. One option is to ensure prior authorization has been obtained, and another option involves ensuring your employees are receiving their drugs/treatments in approved settings.
During uncertain and volatile conditions, employers need to strategize and take active steps to mitigate the high costs of high-level health care plans.
Do you have any questions for us? Do you need some expert advice? Contact us!