Healthcare benefits are a top three-line item expense for most employers. Worse, they are ever increasing, often seeing yearly increases of 10% or more. Unfortunately, most employers believe there isn’t a viable alternative to those year-over-year increases or a way to help reign in health benefit spending. Here are four strategies that large employers have been using successfully that small to mid-size companies can implement to lower their health benefit spend in 2019.
The essential first step in lowering health care benefit spend is to change the paradigm of considering only the next 12-month cycle to taking a strategic long-term approach. Most owners, CEO’s, CFO’s, and other executives are simply too busy with their day-to-day work to devote any time working on their health insurance spend. That doesn’t change the fact that it is one of the largest expense companies will incur, falling just behind payroll. How can a business afford not to review that data? Taking a short-term approach and only dedicating a couple days a year to this expense is a recipe for overpaying for a diluted benefits package. By taking a long-term approach and integrating cost containment strategies, you will have the ability to improve your health benefits package over time, which almost always helps when retaining and recruiting top talent.
Switch from Fully Insured to Self-Funded
The standard fare of the industry for small and mid-size employers is the fully insured option. All of the risk is offloaded to a carrier, but that comes in exchange for abandoning any transparency or claim information and receiving an ever-increasing cost. Self-funding through the captive model is a much better option, offering a lower risk funding strategy. This allows you to better manage your spend utilizing a wide range of cost saving strategies and tools. Self-funding provides transparency (so you know where your money is going). It also allows for plan flexibility and control. Best of all, it lets you unbundle your services so you can pick and choose the ones which are the right fit for your company and employees.
Select the Right Advisor
Finding the right advisor can be as simple as finding one that takes a consultative approach to your benefits. On the other hand, that is easier said than done. You want someone who you will see on a regular basis, who gets to know your company culture and who will work with you long-term. This is a far cry from typical advisors who you see once a year, just to show you how much your increase in spending will be. A consultative advisor will work with you throughout the year to analyze claim information and recommend cost containment strategies, which in the long-run improves your bottom-line.
Implement Low-Cost, High ROI Cost Containment Solutions
Concierge services, telemedicine, pharmacy benefit managers, biometric screening, plan analysis, data analytics and more. These are all relatively low-cost solutions which can save you money. All have a high ROI, even if it isn’t immediately obvious. Data analytics, for example, can help you identify claim trends that require cost saving responses.
Ultimately, there are plenty of ways to save on healthcare spending. These 4 strategies are not the be-all, end-all, but they are the best place for most companies to start. Because health benefit spend is typically a top 3-line item expense for companies, it is just too big to be ignored. Sticking with the status quo will net you ever-increasing costs, with no option to decrease your spending and not enough transparency to make a good decision for the future.
If you haven’t taken the time to learn more about Roundstone’s model for captive healthcare, which can be applied directly with current benefits plans, now is the time. With Roundstone’s turnkey customized solution, everything doesn’t need to be learned from scratch or changed, saving valuable time on the part of employers which can better be spent growing their business. Give us a call to learn more about how your company can benefit from taking back control over your healthcare spend.