Rethinking Healthcare Incentives to Unlock More Value
In late 2019, the Kaiser Family Foundation conducted a survey of employer health benefits to learn more about the average spend and strategies to contain cost. To no one’s surprise, the survey indicated that the cost of employer-sponsored health coverage increased four percent for single health insurance plans and five percent for family coverage between 2018 and 2019. Average annual rates for each type of coverage were $7,188 and $20,576, respectively.
As the cost to employers continues to climb annually, some small and medium businesses (SMB) find themselves priced out of offering health insurance to employees. This does not bode well for employee retention, not to mention it may be violating federal law depending on the size of the company. SMBs can feel like they are in an impossible catch-22 situation, but human resources departments can take several steps to bring employee healthcare costs under better control.
Compare Plans from Multiple Insurance Companies
The rates that SMBs pay for employee health coverage can vary considerably from one insurance provider to the next and even by quarter. According to a September 2019 article published by Health Tracker, employers listed the features below as most important when shopping for employee health coverage.
- Overall cost and quality.
- Selection of providers available.
- Whether the plan offered tiered networks to give employees better cost-sharing options based on whether they choose providers from a preferred or non-preferred tier.
- Efficiency of the plan from an administrative perspective.
Working with a health insurance broker can be your most effective tool in finding the best health plans for your employees each year. One trend that has continued for several years is for health insurance companies to offer discounts to employers that provide certain wellness benefits to their employees. Common examples include:
- Making telehealth visits available and encouraging their use. Employees utilizing telehealth for non-emergent conditions such as strep throat where the provider can easily call in a prescription has the potential to save your organization a significant amount of money. Another way that telehealth saves money is by making a more cost-effective option available to employees instead of visiting an urgent care center or emergency room.
- Offering employees reimbursement to participate in weight loss and exercise programs.
- Smoking cessation programs that pay the partial or full cost of employee participation in a program offering tools and support to stop smoking.
- Diabetes management program that can prevent expensive trips to the ER for sudden high or low blood sugar changes by keeping diabetic employees on track with their goals.
Both employers and employees benefit when the employer chooses a healthcare plan with wellness benefits and incentives. Employers pay lower rates for premiums while employees receive greater support to maintain a healthy lifestyle. This, of course, results in lower claim amounts for employers as well.
Consider Moving to a Self-Insured Plan
SMBs facing annual increases in employer-sponsored health insurance are increasingly turning to self-insured plans as a way to manage costs. Making the switch is a big decision that requires your organization to carefully consider the pros and cons to determine if dropping its current health insurance carrier in favor of a self-insured plan is the right move. Your SMB does need to be willing to take on some risk, especially as it relates to moving administrative duties in-house and payment of potentially large or catastrophic claims.
In exchange for assuming these risks, your company can realize the following benefits by switching to a self-insured health plan.
- Improves flexibility to tailor plan offerings to employee needs.
- Removes the obligation to pay provisions for state insurance.
- No need to pay administrative fees to the insurance company or have your company’s premiums going toward their profit.
SMBs that tend to do best with a self-insured plan have had a stable claims experience for the past several years that gives them improved ability to predict future costs. You should also have an established relationship with a health insurance broker to assist with such things as forming partnerships with third-party administrators, stop-loss carriers, and others.
QSEHRA Can Be a Healthcare Solution for Small Employers
Employers small enough not to meet the requirements to provide employee health insurance or that simply cannot afford to do so have another option available to them with QSEHRA. This acronym stands for Qualified Small Employer Health Reimbursement Arrangement.
Offering your employees a QSEHRA plan instead of a traditional health insurance plan provides them with a set reimbursement amount for their healthcare expenses. For example, employees can use their monthly reimbursement to pay their health insurance premium for coverage they received through the Marketplace program. They can also use their funds to cover co-pays, deductibles, and prescriptions up to the limit of the monthly reimbursement.
Include a Health Savings Plan Option with High Deductible Plans
As much as SMBs may not want to shift the burden of healthcare expenses to employees, sometimes they simply have no choice. If your company already offers HDP or intends to, including the option to add a Health Savings Account (HSA) can save both the company and its employees money.
With an HSA, single employees can set aside up to $3,550 per year while married employees can set aside up to $7,100 per year to pay out-of-pocket healthcare expenses on a pre-tax basis. If the employee does not spend all money in the HSA, it rolls over to the next year. Unused HSA funds can also rollover to a new employer when employees leave your company. To be eligible, no one else can claim the employee as a dependent on their tax return nor can they have Medicare or a Flexible Savings Account (FSA) for healthcare purposes.
Contact Firefly Health for Assistance with Establishing a Virtual Care Benefit
Firefly Health offers a 100 percent virtual care experience for self-insured employers or those partnering with an insurance company to offer this employee benefit. We invite you to review our How It Works section to learn more or contact us for a quote or additional information.
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