Finding ways to manage employee benefits costs is a never-ending battle among employers. In fact, HUB International’s 2018 Benefits Barometer study showed that 81 percent of respondents ranked managing the costs of their benefits plans as a top priority this year.
Start by developing a multi-year plan that enables you to take a long-term perspective on plan design, funding, contributions and health management strategies. This plan will enable you to achieve sustainable savings without adversely impacting your employees with major plan changes all at once.
Once you have determined your overall cost savings strategy, there are many ways to re-structure your employee benefits plan to better manage costs. Consider the following 11 strategies:
High deductible – Potential savings: 2% to 8% through lower annual premium increases. This approach motivates employees to carefully consider how and when to access health care services.
Multi-Plan Spectrum – Potential savings: The costs of unneeded coverage. Multi-plan benefits options (like the choices of basic, good, better and best plans) can serve a wide range of employee needs, budgets and concerns and reduce the potential of over-insuring the healthiest employees.
Narrow networks – Potential savings: 5% to 17% annually versus a total network of providers. Under narrow network plans, 99% of health care costs are covered when in-network providers are utilized. These providers have track records for the highest quality of care and have proven over time to deliver it at a lower cost.
Voluntary benefits– Potential savings: Eliminate or reduce annual premium increases. Voluntary benefits supplement fixed plan options and can include hospital-stay expense coverage, dental, vision, disability, life insurance and more.
Telemedicine – Potential savings: A 5-to-1 ROI. Telemedicine allows employees to access medical care at a lower cost than the traditional health care model, and reduces potentially unnecessary (and expensive) emergency room visits and urgent care services.
Defined contribution – Potential savings: Reduce or eliminate 5% to 10% average annual premium increases. This strategy allows organizations to directly manage costs and encourage employee plan selection and ownership. It can be coupled with an employer exchange shopping technology solution.
Self-Funding – Potential savings: 4 -10% in annual premium increases. Growing increasingly popular even with smaller organizations, self-funding gives businesses more direct control over their costs.
Stop-Loss Captive – Potential Savings: Up to 8% in medical claims; 2% reduction in projected medical cost trends. This risk-sharing arrangement can be a first step into self-funding, helping small and mid-sized employers reduce volatility in their healthcare costs.
Pharmacy Carve Out – Potential savings: Up to 25% for an expense that typically comprises 20% of overall health care costs. To curb the steep rise in pharmacy costs in recent years, a pharmacy contract management company can re-negotiate new terms, including better contract provisions, discounts and rebates. For more information, visit our pharmacy audit resource center.
Reference based pricing – Potential savings: Up to 20% of total medical claims. Reference-based pricing promotes comparison shopping by establishing caps for selected services that have a wide-range of prices from providers.
Clinical care management – Potential savings: Varied, ranging from 29% fewer ER visits, 30% fewer inpatient visits and a 13% reduction in preventive care office visits. Implementing wellness and disease management programs reduces the prevalence of chronic illness among employees through advanced data analytics and improved access to specialized treatment.
HUB International’s employee benefits specialists are ready to help you evaluate the optimal strategies for your organization’s culture and employee needs. For a more in-depth look at employee benefits cost management visit our online experience or download the full e-book.