In Part One of this Employee Benefits series, we examined the latest factors and trends that are driving up healthcare benefits costs for employers. Now, in Part Two, we take an in-depth look at an innovative yet practical four-step process that can help employers manage increased expenses so they can continue to provide the benefits employees want most.
The series provides curated insights, research, and data collected in our exhaustive 2023 Employee Benefits Mid-Year State of the Market.
Finding the right balance between containing healthcare benefits costs and providing employees with the benefits they need can seem like a never-ending effort.
Yet, forward-thinking business leaders realize that providing comprehensive and competitive employee benefits is crucial not only to attract and retain top talent, but also to endure current challenges in the market and thrive over the long term.
Here are the common themes and steps for how sophisticated employers put that realization into action:
Look at employee data to spot trends.
Look at data to uncover issues in employee populations that may be contributing to higher costs.
Monitor specific numbers for data points like more numerous utilization, procedures, and prescriptions and determine if these services can be expected to continue over the foreseeable future.
For example, let’s say the data shows activity for diagnostic tests only given when someone has cancer. Just having that bit of insight can let you know that expensive treatment may be on the horizon and will likely be incurred by the health plan.
Spot sharp spikes in data, like recurring charges for expensive care options when more cost-effective options are available.
If, for instance, data shows rising use of the ER versus telemedicine, hospital visits for x-rays versus going to imaging centers, or out-of-network providers versus in-network providers, employers can work toward turning the curve, particularly with communications that can remind employees of the options available and when to access each one.
See trends in workforce demographics that may help position data trends for insurers in a more favorable light at renewal.
For example, if overall claims increased or decreased year-over-year, consider if downsizing or recruiting efforts resulted in an older or younger average age for the workforce. Or if the organization has plans to add staff, that can increase the employee population and make it a more attractive risk to insurers.
Identify required, expected, flexible, and extra benefits.
Examine ways to offer an expanded array of benefits together with the flexibility that employees want.
Consider four different categories of benefits so you and your team can make sure the package you put together not only covers required and expected benefits, but also includes a robust mix of flexible and extra benefits options that today’s employees need and desire.
Perform a cost-benefit analysis. Assess the cost implications of each benefits option against the potential return on investment. While some benefits might be more expensive initially, they could yield long-term returns by reducing turnover, increasing productivity, or boosting employee morale.
Analyze workforce data to gain insights. Conducting surveys and seeking feedback from employees, for example, can gauge their priorities and help you understand which benefits they value the most. (More about this in Step 4: Evaluation.) Employers can also research industry standards and regional norms to remain competitive. Benchmarking against similar companies in your sector and location can help identify which benefits are commonly expected and appreciated by prospective employees. Also, look at participation rates for benefits you offer to determine which have high or low uptake.
Determine the right contribution model or dollar amount to cover along with the premium amount for which employees will be responsible. If an employer covers 80% of the cost of a health plan, for example, an employee would be responsible for the remaining 20%.
Leverage benchmarking to help inform which contribution model might be right for the organization. Knowing how similar-size companies in the same industry and location are sharing the cost for health insurance premiums with employees may provide a valuable baseline for thinking about the type of model to consider and help to pave the way for developing an effective long-term strategy.
Make decisions based on resources. It may sound obvious, but it’s important to consider internal factors, like HR bandwidth and available cash flow. This helps ensure that a chosen plan or funding arrangement matches the available resources required to implement and manage the benefits plan so it’s sustainable over the long term.
Consider how to tailor benefits to be more inclusive, particularly in response to current trends in the workplace, including:
The most age diverse workforce ever. With five generations counted in the U.S. workforce today, it’s important to realize that each one has lived different experiences, which are shaping their lifestyles, beliefs, and preferences for benefits. For instance, older employees may be focused on those that can help them build assets for and generate income when they reach retirement, while younger workers may seek flexible work arrangements to manage personal responsibilities and career advancement to nurture professional goals.
As a result, there’s now a growing need to offer different lifestyle benefits across employee populations. So, even as more budget spend is allocated to provide health insurance to employees, employers must also reevaluate other offerings and rethink how to deliver an ever-expanding range of lifestyle benefits employees want to keep them engaged.
Greater strides in diversity, equity, and inclusion (DE&I). Over the past few years, employers have taken meaningful action to adopt policies and practices that create safe, inclusive work environments to embrace people of different races, religions, ethnicities, genders, abilities, and backgrounds.
Voluntary benefits can help make offerings more inclusive. Voluntary benefits can help employers cover gaps in group health insurance and supplement traditional offerings at a discount. However, they can be paid for (either in part or in full) by employees, typically through payroll deduction. Even better, employers can choose providers that offer the extras that today’s diverse workforces often want, like:
Employees who are satisfied with their firm’s DE&I policies are 1.6x more likely to still be with that organization 12 months later.2
Invest in behavioral incentives. Issuing credits toward a lower premium or giving gift cards are just two examples of incentives that can be used to motivate employees to engage in healthier habits, such as regular exercise, nutrition, quitting smoking, taking a health assessment, or even choosing a primary care physician. And as they get healthier, employees may avoid conditions that can be expensive to treat, as well as lead to tangible and positive results for employers, like reduced absenteeism, increased productivity, and improved overall morale – all of which can positively impact overall healthcare costs.
When an incentive program works, the relatively low cost of the provided incentive can pay dividends in lower healthcare costs.3
Look at your benefits administration platform, for instance, and other tech tools to make sure they can:
Tech Check: Cure8 Mobile Health
New platforms that leverage the power of innovative technology are currently disrupting traditional delivery and utilization of health services. Cure8, from Baldwin Risk Partners, is one example. From the convenience of a smartphone or desktop, Cure8 can help employees get the most out of the benefits their employer offers at any stage of their healthcare journey.
A set of curated digital-first health management solutions, financial tools, and partner integrations, Cure8 provides a continuously innovating subscription designed to refine member experience, halt failing models, return patients to better health, and reduce overall healthcare spend. It allows access to health plans, virtual primary care appointments, referrals, health rewards, and wellness challenges, as well as integrates mobile health applications and prescription services. For more information, contact your BRP advisor.
Achieve greater cost containment using different plan options.
Adopt different strategies that can help contain costs and manage expectations when care is needed.
Weigh the benefits of alternate plan models as a possible long-term solution:
Ultimately, the more educated employees are about healthcare, the more money they can save on their own healthcare bills and, in turn, employers can save costs.
Get feedback from employees to stay the course or course correct
Assess benefits to see what’s working, what’s not, and how to make adjustments to improve results and move forward.
Get feedback from employees. Suggested guidelines include:
Examine relevant, quantitative data to track progress towards achieving your established goals and metrics. Examples include:
Evaluate mental health offerings. In a recent Paychex survey, business leaders said the growing trend of mental health issues is having negative effects on their operations, including:
To make sure mental health offerings and employee assistance programs (EAP) are indeed providing access to the services and support employees may need, smart employers can evaluate them for the following:
Partner with a benefits expert who not only has the knowledge and experience to evaluate the status of your benefits package but can also meet on a regular basis to provide insights, guidance, and actionable steps about how to best structure and deliver health-related benefits to employees – and help you find increased effectiveness and cost savings.
By following a disciplined process of discovery, planning, implementation, and evaluation, you can demonstrate a commitment to your employees’ well-being and still offer cost-effective healthcare benefits.
In the next part of our Employee Benefits series, we’ll delve into the important role experienced benefits advisors play in this process. The upcoming article will cover how they can be a strong advocate in helping employers contain the rising cost of providing healthcare benefits to employees.
In the meantime dive deeper into the trends and data about today’s challenging Employee Benefits market in our 2023 Employee Benefits Mid-Year State of the Market.
1 Center for American Progress, “Health Insurance Costs Are Squeezing Workers and Employers,” November 29, 2022
2 MetLife, “The Rise of the Whole Employee: 20 Years of Change in Employer-Employee Dynamics,” 2022
3 Healthjoy, “Incentives: The Key to Healthcare Cost-Containment,” February 26, 2020, Claire Wiseman Imber
4 Global Newswire, “Telehealth Market to Hit Enormous Growth of 24.13% By 2032,” April 24, 2023
5 Managed Health Executive, “The Rise in Formulary Exclusions,” May 2021
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