Controlling Costs with Strategized Health Benefits
Aon published a report in the latter quarter of 2020 concerning medical rates and expectations for employers for the year 2021. While the surge in healthcare costs in the United States, Canada, the Middle East, and Africa is quite significant, countries in the UK and Europe are to experience a moderate increase of up to 5.5%.
The situation was further complicated when, even after vaccines being given the green flag, lockdowns continued. The second wave of infections in addition to a variant now causing even more of concern has raised further questions
Considering that health benefits are often one of the biggest expenses for many businesses. The pandemic and potential recession, which industry experts are predicting in the near future, along with increased healthcare spending, etc. are all pushing employers to reconsider their employee health benefit plans.
Now, as we make our way through 2021, employers now have to assess whether their current benefit plans are meeting their cost standards and thresholds. They have to think outside the box and consult a general insurance specialist that knows their way around employee health benefit programs.
Instead of simply raising deductibles and reducing the coverage provided in the policy, employers can choose a different health benefit model. The goal should be successfully reducing health benefit costs without leaving their employees’ wellbeing as an afterthought.
In addition to considering a different health benefits model, employers can go the route of changing how they pay for it. Typically, employers pay for a portion of the health benefit costs and remaining costs being transferred to the employee.
In the US, there is a new model called the defined contribution model. This allows employers to fix a budget for every employee, allowing them to find a plan that meets their needs within the said amount.
This way, employers don’t have to find a plan that fits all employees and they can control costs by limiting their budget to spend from the get-go.
While this model is currently being used in the United States, it offers a new perspective for employers in other countries around the world.
When your company does finally decide to evaluate their benefit plan and leverage it to control costs, there are a few considerations to be mindful of. The first consideration is the cost of the health benefits program for the employer and employee. Premiums, hidden fees, taxes, etc. all need to be addressed.
Secondly, the program should be flexible enough to allow future adjustments. Being able to change contributions, switch coverage, etc. will be critical for navigating your company’s health benefit program as the pandemic continues.
And lastly, employers should make sure their carrier or insurer is a reliable partner. Regular check-ins, efficient reporting, and consultation on your decisions come with having a general insurance expert as a distant member of your team.
As uncertainly is still ripe for businesses around the world, strategized health benefit programs can be used as a lever for controlling costs.
Writen by: Andrew Cowling on 2021-03-31
Tagged under: Insurance.
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