For most organizations, the largest benefit expense is employer-sponsored health insurance plans. According to the Kaiser Family Foundation, the average annual premium for employer-sponsored health insurance in 2019 was $7,188 for single coverage and $20,576 for family coverage.
Increasingly large corporations are self-insuring and according to Statista, “the percentage of employees covered by self-funded plans has increased from 44 percent in 1999 to a record high of 67 percent in 2020”. This is good news for large companies, but for small businesses, defined as businesses with less than 500 employees, self-funded plans are not an option due to the financial cost and risk.
With self-funded/insured plans, employers do not pay premiums to an outside insurance company, instead, they pay employee healthcare claims as they occur. Typically, only large corporations are self-funded because the financial risk is huge. For small businesses that cannot afford that financial cost and risk, they instead are fully insured by an outside insurance provider. With fully insured plans, employers pay a certain amount each month (monthly premiums) to a health insurance carrier and the insurance carrier covers the costs of employees’ healthcare and assumes the risk.
Small-business owners are often left with little recourse and few options when a health insurance carrier hikes up its costs. In this blog, we detail the best methods and practices to drive down costs and improve health outcomes in your organizations.
Methods for Reducing Healthcare Costs
Three of the six methods listed below--telemedicine, medical case management and nurse advice lines--are all services that are included sometimes within a health insurance plan. If the insurance plan your company uses includes these services, it is important to educate employees on the benefits and how to utilize them, doing so will reduce healthcare costs.
Telemedicine is a virtual visit with a primary care provider. Employees can speak directly with medical professionals through video chat, phone call, or email.
Telemedicine moves healthcare closer to employees, makes services more accessible, and allows them to access healthcare from anywhere. It also saves employers valuable work time from their employees and is better for monitoring chronic disease.
Especially with the pandemic, people are much more hesitant to leave their homes and go into an office for an in-person doctor’s appointment. In-person doctor’s visits can also induce anxiety for those who are immunocompromised and at greater risk to COVID-19.
On top of Telemedicine being more convenient, it is also more affordable. According to Save Health, a typical telehealth appointment with a primary care provider costs about $50, as opposed to a traditional in-person office visit that generally costs about $176 per visit and there is typically no co-pay at all for employees.
Medical Case Management
Medical Case Management is a program that helps coordinate care for employees that are disabled, ill or injured by suggesting treatment options and then monitoring ongoing medical treatment. This program reduces the frequency of patient visits, the use of diagnostic testing, and length of hospital stay, which reduces healthcare spending for companies long term.
Integrated Well-Being Programs
Well-being programs are programs that incentivize employees to hit their short and long-term health goals through small rewards. The unhealthier a workforce is, the chances are higher that more health insurance claims will be made, which makes it difficult to get affordable healthcare plans. Engaging the workforce to adopt healthy behaviors and rewarding them for staying on track can save a company a tremendous amount of money in insurance costs.
Ensuring a healthy workforce not only reduces health care spending for an organization but it results in a more productive, motivated, happy, and engaged workforce, which also reduces absenteeism.
An easy and effective reward to incentivize employee health goals is eGift cards: With the current state of the world, eGift cards offer instant, contactless delivery, which is ideal for remote or dispersed workforces. In addition to being an easy reward to distribute, gift cards remain the #1 most-requested reward throughout all incentive and rewards programs.
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A catastrophic insurance plan is a form of health insurance designed to provide coverage for significant, high-cost medical events. With this plan, employees pay for most day-to-day, minor health expenses themselves, but the high-cost catastrophes are covered.
Small businesses with less than 50 full-time employees are not required to offer their workforce health insurance but they typically are required to pay for at least 50 percent of employee premiums. Catastrophic insurance can be a great option for small businesses that are looking to reduce insurance costs.
Nurse Advice Lines
Nurse advice lines offer direct patient care 24/7 and are cheaper than having to go into a doctor’s office. Advice lines also allow employees to receive care from the comfort of their homes, which gives them a simple and effective way to get answers to their questions in a timely manner. According to Envolve PeopleCare, nurse advice lines help individuals make the most appropriate health care decisions and some organizations cited “savings of $2 to $3 for every $1 invested in a telephone triage system.”
Higher Deductible Plans
Higher deductible plans offer a lower premium cost per plan while still providing basic preventive services such as annual check-ups, vaccines, and generic prescriptions. They are a great cost-saving option for small businesses--especially those with a younger workforce--because they are less likely to have health issues and the need to file claims.
While all of these methods listed above are great ways to reduce health care spending in organizations, the best and most effective way to reduce costs will always be to have a healthy workforce and gift cards are a great tool to encourage healthy behaviors.
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