Group Medical Cost-Cutting Ideas

According to the Small Business Health Insurance Network, "More than 60% of people in the U.S. with medical coverage receive their healthcare plans through an employer sponsored group health insurance plan." Employers offer medical coverage in order to attract and retain employees. However, health insurance costs are a major expense for employers to consider. According to EBSCO Publishing, the cost of healthcare coverage for a family is approximately $10,000 per year, which is almost equivalent to a minimum wage salary.

HRAs

• A Healthcare Reimbursement Account is an IRS-sanctioned account that permits an employer to set aside funds for the reimbursement of medical expenses paid by participating employees. HRAs can reduce costs of group medical insurance. HRAs can greatly enhance the structure of an employer's benefits plan. An HRA allows employers to reimburse the medical-related expenses of their employees on a pretax basis. This pretax reimbursement allowance may mean a reduction in medical costs for the employer.

Employer-Sponsored

• An employer-sponsored group medical plan is a healthcare plan that is paid in part or entirely by the employer. Some companies can afford to pay 100 percent of employee coverage. Others pay only a portion of the plan. Companies can reduce group medical costs by only paying a portion of medical insurance for each person. Traditionally, a company may pay 30 to 50 percent toward medical coverage. An employer might pay 50 percent of the insurance premium while the employee pays the other half.

Benefit Eligibility

• One way to cut costs is to activate benefits after a certain tenure. Some companies offer medical coverage to employees only after they have worked for a certain period of time, such as 60 days or 90 days. Another option is to allow benefits after employees have worked a certain number of hours for the company. Rather than starting healthcare benefits on the date of hire, the company can ensure they are investing in the most loyal employees and save money in the process.

Temporary Insurance

• To cut costs, companies can provide group medical on a temporary basis instead of through a traditional plan. Medical insurance, accident coverage, disability insurance, vision and dental are all available on a temporary basis. Temporary insurance helps to cover unexpected illnesses, accidents and expenses resulting from medical bills. Temporary group medical plans may be suitable to organizations or companies who work project-to-project or who hire seasonal employees. Obviously, coverage for a temporary policy will be lower than one offering continuous coverage.