Employers are still struggling with ways to control the rising costs of their health plans. When coupled with the impact of the ACA– Affordable Care Act, it could have a significant impact on your bottom line. Our job as employee benefits consultants is not just to find areas where we can cut costs for our clients, but to examine and address the topics employers will need to consider in the future to maintain a sustainable and profitable business. Here are some key strategies for coping with the ACA administrative burdens, and controlling your health plan costs while expanding employee health benefit options to help attract and retain top employees.
Self-Funded and Captive Insurance Arrangements— Employer Self-Insured Benefits Plan
Self-funded health plans used to only be an option for larger employers, but now more and more employers are choosing self-funded or captive insurance plans, even down to 50 lives, because of the new regulations and changes coming out with the ACA in January of 2016. One of the primary advantages of becoming self-funded is employers typically save between 6-10% of the total cost of the health plan, and in many scenarios it can save quite a bit more. Self funded options can also be supported by the online marketplace as well as other advantageous programs including:
- Pharmacy benefit management programs (PBMs)
Pharmacy has been a neglected topic, but it needs to be one of our main focuses. Pharmacy benefit costs are the fastest growing segment of national health expenditures, rising at a rate faster than hospital care and physician services combined! Pharmacy costs currently represent 20-25% of our overall medical spend in the U.S., a percentage predicted to grow. Implementing PBM programs has been achieving immediate and significant savings (10-30%) for our Northwest customers. These savings have been achieved with no change to the plan design, and without disruption to employees or members.
- Stop loss programs: There are many new options in the marketplace with stop loss carriers that not only provide the basic needed protection, but also provide unique options for the employer. For example some carriers now provide return of premium options, and many carriers provide future renewal rate cap options. In addition employers now have the ability to protect themselves against catastrophic events such as transplant claims, and end-stage renal disease.
For more information on captives and stop loss programs, read our white paper at www.Healthcare-Captives.com
Defined Contribution Plans—
Defined contribution health plans allow employers to set their costs on a monthly basis and encourage employees to take an active role in their healthcare by being responsible for their benefit dollars. Employers give employees a fixed dollar amount that they can choose to spend on health insurance and/or other benefit programs as they see fit.
Wellness Programs— The Health of Your Employee Group is the Most Important Factor in Your Health Plan.
It’s important to keep in mind that 85% of your healthcare spend is on medical and pharmacy claims. However, it’s also imperative to note that the cost of someone being out long-term is substantially more than what you’re paying just in health insurance, (absenteeism & presenteeism) . Healthier employees can lead to better bottom lines, and implementing data analytics coupled with a wellness program can help with overcoming specific health-related issues that typically account for a large percentage of your costs.
Employer Healthcare Exchanges— An Alternative for Expanding Your Employee Health Benefits Offering.
The idea behind an online marketplace is to offer your employees more choices, allowing them to customize a benefit plan or package that meets their specific needs. In addition these platforms provide extensive support for employees, while simplifying administrative time for HR teams. In the online marketplace you can offer various employer paid and voluntary benefits to meet the needs or desires of your employees. This is highly beneficial since offering different options and choices to your employees gives you the opportunity to increase employee retention and recruitment.
When considering the implementation of an online marketplace, it’s vitally important to create the right menu of plan designs to fit the needs of your employees while maintaining the financial stability of your overall benefit offering. Whether you’re looking to simplify open enrollment, or enhance employee choices and your employee knowledge bank, you want to be careful and work with an experienced advisor who will steer you in the right direction according to your variables.
If you have additional questions or would like to schedule a consultation, please contact us.
*Self-funded health care is a self insurance arrangement whereby an employer provides health or disability benefits to employees with its own funds.