How to Manage Small Business Healthcare Costs
You can provide your employees with a variety of benefits, but there’s one that stands out from the crowd: group health insurance.
Not only does this benefit help retain employees, but it also allows you to attract quality talent.
With healthcare premiums for the average family on the rise, it’s critical to provide employees with the best possible healthcare at a reasonable cost.
Here’s a telling excerpt from the National Conference of State Legislatures:
“In 2018 the average annual premium for employer-based family coverage rose 5% to $19,616 for single coverage, premiums rose 3% to $6,896. Covered workers contributed 18% of the cost for single coverage and 29% of the cost for family coverage, on average, with considerable variation across firms.”
Choosing the Right Health Insurance Plan
While there are many ways to manage healthcare costs at your business, it all starts with choosing the right type of plan. Options include:
- Health Maintenance Organization (HMO): An HMO provides plan participants with access to specific hospitals and medical professionals within its network. With some plans, a PCP referral is necessary if you require testing or an appointment with a specialist.
- Preferred Provider Organization (PPO): A PPO provides more flexibility than an HMO, with access to both in-network and out-of-network providers. With a PPO, participants can see a specialist without a referral.
- Point of Service (POS): A POS plan combines many features of an HMO and PPO. These plans typically require you to designate a PCP who can provide referrals. Preventative care benefits are typically included and PCP visits are not subject to a
- High-Deductible Health Plan (HDHP): An HDHP has a higher deductible than a traditional insurance policy. However, since the deductible is higher, the monthly premium is typically lower. Many companies combine an HDHP with an HSA to provide more comprehensive coverage.
- Health Savings Account Qualified High-Deductible Health Plan (QHDHP): A QHDHP is a low premium, high deductible policy. All covered expenses are applied to an annual deductible, capped at the annually indexed IRS approved limit.
Tips for Managing Healthcare Costs
Regardless of which plan you choose to offer employees, there are steps you can take to manage healthcare costs:
- Adjust deductibles and co-pays: By increasing deductibles and co-pays, you’re able to reduce the overall cost of group health insurance. The key here is to make reasonable adjustments, as you don’t want to transfer a heavy financial burden to your employees.
- Wellness programs: By actively seeking ways to keep employees healthy, it’s possible that they’ll require less medical care. This can result in lower healthcare costs. There are many types of wellness programs, such as fitness class discounts, gym membership, annual screenings, and smoking cessation programs.
- Healthcare assistance services: Yes, it costs additional money, but it can help reduce healthcare costs over the long run. Your current group health insurance provider may offer a program that gives employees access to nurses or other medical professionals by phone or online.
There’s no right or wrong way to manage healthcare costs, as this depends largely on the financial situation of your company, employee count, and other details unique to your organization.
The more options you explore when purchasing group health insurance, the easier it is to provide employees with comprehensive coverage at an affordable price for all.