By Linda Keller
If you’re like many HR leaders, you’re grappling with how to manage rising health benefits costs even though you believe you’ve done everything you reasonably can do to make that happen.
This is one of the issues HUB International heard about as we conducted our third annual Employee Benefits Barometer 2018 study. Our findings suggest that HR leaders need more guidance and support from their benefits advisor when it comes to managing costs, meeting the needs of an increasingly diverse workforce and positioning themselves as a strategic partner to executive leadership.
In the study, over 300 employee benefits professionals from organizations employing 50 to 1,000 responded. Two-thirds have made managing health benefit costs their top priority again in 2018. Yet half have no plans to put any new strategies in place over the next year to 18 months.
Cost cutting initiatives that have worked well
Interestingly, however, respondents identified three initiatives that were most effective in delivering savings: high deductible health plans, multiple plan options and telemedicine benefits. Those are all good options to consider. But other, lesser-known options show significant potential to return meaningful savings. Here’s what we’d recommend.
Start with your pharmacy costs, which are typically one of every employer’s top three health plan costs. If your benefits plan is self-funded, but you haven’t done a carve-out to contract these benefits to a Pharmacy Benefit Management (PBM) firm, you may be missing out. In addition to cost reduction there are other advantages, like improved transparency and oversight. If you have done this, consider an audit of your contract for terms, pricing guarantees and assurance that expensive specialty drugs are being properly priced.
Another trend to think about is how the delivery structure is shifting away from fee-for-service care. Instead, high performance networks are evolving to deliver value-based care and quality outcomes that, ultimately, will be more cost effective for everyone. These are worth investigating for their availability and fit with your organization.
Other factors in your benefits planning
There are other factors that should play a role in your benefits planning that can have an effect on your organization beyond dollars and cents, per se – and perhaps should get more consideration, based on our Benefits Barometer findings.
For one, there’s the need to address the diverse benefits needs of the multigenerational workforce, which has declined as a top priority among HRleaders : Only 20 percent ranked this as a major concern this year, down from 28 percent in our 2017 study. This has implications for benefits planning. Millennials and Gen Z are gaining in numbers and influence in the workplace, plus today’s high employment levels makes it mandatory to anticipate their needs if you hope to compete effectively in the war for talent.
Each demographic has distinctly differing needs and preferences, and reflecting them is key to shaping an effective benefits programs – from every perspective. Perhaps you are spending too much on benefits that are meaningless to your employee demographics and not enough on those that would drive satisfaction.
The employee health benefits environment is increasingly dynamic, and being reshaped as pressures like rising health benefits costs and changing employee mix and preferences. Understanding what it all means for your organization and finding the smartest way to respond is the route to outcomes that make you stand out.
Download the results of our 2018 Benefits Barometer survey to learn what HR leaders in mid-sized companies have to say about their top priorities and challenges in 2018.
Linda Keller is the Employee Benefits National Practice Leader at HUB International