Discover The Latest Employee Benefits Trends & Strategies To Manage Rising Medical Insurance Costs
Did your employee benefits renewal increase again this year? Healthcare costs are rising just isn’t a good enough answer. Healthcare inflation continues to rise. Now, employers must rethink their benefits strategy to remain competitive and control expenses.
25 to 35% of every premium dollar you pay goes toward prescription drugs. It doesn’t go to hospital stays. Prescriptions control a large portion of your renewal prices.
This article highlights what drives your employee benefit costs. We share the aspects of you can influence and those costs you can’t. Also, include specifics including how the pharmacy your employees choose can save you money.
What is the State of Employee Benefits Today?
Employee benefits packages offer health insurance, wellness programs, mental health resources, and flexible work options. However, health insurance premiums remain most expensive component of benefits.
"I really think about how do we help them retain employees, right? I mean benefits is the number two spend typically after payroll on a balance sheet. So it's becoming a huge line item, right, that everyone's talking about." - Steve Kelly, Managing Partner Kelly and Calloway Insurance Group
Why Are Medical Insurance Costs Rising?
- Healthcare Inflation: Hospital services and prescription drugs are more expensive.
- Medical Technology: Advanced treatments improve outcomes but raise costs.
- Chronic Conditions: Illnesses increase long-term healthcare expenses.
- Regulatory Changes: Administrative costs continue to rise that don't provide any more health benefits to the employee..
Impact on Employers and Employees
Employers face tough choices. Do they absorb rising health insurance premiums? Businesses can shift costs to employees or reduce their insurance coverage. Now, employees experience higher out-of-pocket expenses. These expenses impact morale and financial well-being.
What are the Trends in Benefits Strategy?
Companies offer the following to manage rising medical insurance costs.
- Wellness programs reduce claims.
- Telemedicine benefits provide more affordable and convenient care.
- Self-funded health plans help control costs.
- Make dental and vision benefits voluntary.
What Employers Should Do?
Companies need to stay competitive.
- Review employee benefits strategy annually.
- Communicate clearly about changes.
- Explore alternative funding models and wellness initiatives.
What's the one thing I should ask my broker this year?
Ask your insurance broker to share your claims data. This isn’t the rate on your quote.
A CFO we talked to recently spends two and a half million dollars a year on medical and hadn’t spoken to his broker in two years. Most employers never get asked what’s driving their number. They just get a new rate and a shrug about healthcare costs.
Pull your claims history and ask whether you’re on a level-funded or fully-insured plan. Ask for the fee structure separate from the medical rate. PEOs are good at showing you one number and burying the rest.
We’ve spent close to two decades in insurance renewals. We are happy to help if you want a second opinion on your fees and education on how to reduce costs.
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