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Ways to Lower Employer Health Insurance Cost

Hiring and retaining quality employees is necessary for organizational success. Of course, keeping top employees comes with a price tag. One of the biggest costs for any company is providing health insurance to employees, which averaged about 8 percent of employee pay in 2010. Health care costs continue to rise, but employers have options to help lower costs.

  1. Increase Deductibles

    • Think of the health insurance deductible like a car insurance deductible. It is the amount an employee has to pay before the health insurance plan pays for a claim. Increasing the deductibles on a health plan lowers employer costs because it shifts the initial costs to the employee. Employees will be more conservative about medical care if they have to pay out a high deductible.

    Implement a HSA and HDHP

    • A Health Savings Account (HSA) is a type of savings product that gives participants the ability to pay for current health expenses and future medical expenses on a tax-free basis. The HSA is combined with a High Deductible Health Plan (HDHP). The cost savings for the employer are due to the lower premiums in a HDHP and employees get to keep and control the money in the HSA.

    Encourage Dependents To Seek Insurance Elsewhere

    • Large employers may be able to save money by paying employees a small refund for not covering a spouse or child on the plan. Giving a small refund, like $600 a year, could be significantly less than the annual premium. The average family premium for a Preferred Provider Organization plan is $14,000 for 2010. Plus the dependents will not add to the claims exposure which can impact the cost of premiums in the future.

    Conduct An Audit

    • Employers may find they are paying for ineligible dependents. Conducting an audit can uncover the employee that got divorced years ago, or children that should no longer be covered. If an employee does not have proof of marriage or qualified dependent children, notify the plan administrator to cancel the dependent coverage.

    Wellness Initiatives

    • Maintenance on a car (such as oil changes, periodic fluid checks and engine tune ups) prevents serious breakdowns from happening. Likewise, wellness initiatives catch health conditions early in order to prevent serious illnesses and conditions from escalating, thereby costing more for treatment. Find a health plan which allows free routine check-ups, chronic health condition management programs or free nutrition and health classes to participants.

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