Syndy Thrash
Evans Enterprises, Inc.
In recent years, the cost of providing healthcare has skyrocketed for most companies. These significantly increased costs have caused financial pain and hardships for their employees as well.
The latest Management Pulse survey examines what EASA service center owners report as they and their employees deal with the increasing costs of healthcare.
More than 40 percent of the survey’s 77 participants indicated that their medical insurance premiums have increased more than 30 percent in the last five years. Nearly 30 percent of the participants saw their premiums increase more than 15 percent in the last year alone!
It’s difficult for companies to help. They’re facing increased costs on just about every front. Only 32 percent of the participants offer a 401k plan with a loan option to help cover medical or other expenses or purchases.
Only about five percent of the participants offer a company-sponsored loan program specifically to cover medical expenses.
Employees have a tough time, too. Nearly half of the participants know of instances where employees delay or don’t go see a doctor, or have prescriptions filled, because of the cost. And more than 40 percent of the participants know of instances where employees don’t take time off from work to recover from a procedure because of the cost in lost wages.
Reasons for increases
Many of the increases for employers and employees come from additional coverages mandated by the Affordable Care Act (ACA), higher medical and pharmacy costs and the lack of competition for consumers.
Let’s face it: most of us don’t know our total medical care costs. As consumers, we are used to co-pays and deductibles. When employees don’t have a personal financial stake in how much they are spending for medical care, utilization and costs will continue to increase each year.
Options to reduce expenses
We’ve discovered that there are a variety of options to reduce a company’s medical expenses: engaging a trustworthy broker that can provide you more buying power, bidding your medical plan regularly, considering employee cost sharing through plan design and contributions, and looking into a qualifying High Deductible Health Plan (HDHP) with a Health Savings Account (HSA) that are available the US.
With the HDHP, employees start to understand how expensive medical care can be because they pay for the entire cost of services until they reach their deductible. It is then they will begin to talk to their doctor for a new, lower-cost prescription. They start shopping around for the lower cost services. When employees save thousands of dollars each year by shopping services and prescriptions, the employer claims costs will typically decrease.
HSAs encourage employees to be better consumers and consumerism can be a driving force to control the rising cost healthcare.
Many workers today do not have the means to pay $1000 medical bill. They are often forced to take out loans and withdraws from their 401ks (if they’re available) to cover unexpected medical expenses. With the HSA, employees can save for those expenses.
Funding with pre-tax dollars
When employee put pre-tax dollars into a HSA, they can save and be prepared to handle those medical bills without depleting their retirement or other savings. In 2016, an employee can fund a HSA up to $3,350 if they are enrolled in an “employee only” medical plan and $6,850 if they are enrolled in a “family” medical plan. This money will stay in their accounts until they use it. Employers can take the savings they will receive by moving to a HDHP plan and give some of it back to employees by matching employee contributions into their HSA or seeding money into their account.
HSAs will continue to grow as the employee and employers make contributions and these funds will be available when medical needs arise. They will have no financial reason to put off needed medical procedures and the time off required.
Since HDHPs are typically cheaper than traditional insurance plans, employees can put the premium savings into their HSAs. In addition, the employer can utilize their premium savings by not only contributing funds to the employees’ HSA accounts, but by also making other benefits richer.
Disability coverage
One option is to offer or enhance your disability plans. Short Term Disability coverage helps employee when they can’t work for a medical reason by providing a portion of their income. Standard coverage can be costly but there are creative ways to lower the cost. You can have an insurance carrier approve and deny the disability claims. You then determine how much of their pay you want to cover and how for how long. Now you are helping employees prepare financially for medical costs and you are providing them coverage to help them with their loss of income while recovering from their medical situations. These are powerful benefits that give employees and their families peace of mind and financial security.
Everyone benefits
At Evans Enterprises, we took advantage of all these cost-control options during our benefit renewal for 2016.Through tough negotiations, changing old processes and costs, moving our medical plan to a HDHP, and combining benefits to get better buying power, we were able to save hundreds of thousands of dollars.
We used the savings to provide employees with Short Term and Long Term Disability plans, contribute matching money and seed money into employee HSAs, increase the company paid life insurance coverage amount and still reduce our overall cost. Don’t become complacent with your benefits. Get informed and creative to save money for both your employees and your company.
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