A recent SHRM report states that employer healthcare costs are expected to increase by 8% to 9% in 2025. Offering health insurance is a vital part of an employee benefits program.
It assures the employees that their employer cares for their well-being. Also, it helps employers ensure better employee health and productivity. However, companies must find smart ways to control those costs to continue attracting and retaining talent. Let us dive into a few strategies organisations can use to optimise medical policy costs without reducing employee coverage.
Top Strategies to Maximise Group Health Insurance Costs
Companies that offer health insurance to employees can benefit from tax advantages. The entire premium paid for employee health insurance can be claimed as a business expense. Moreover, paying for employee insurance reduces taxable profit. Thus, it reduces the organisation’s tax liability. This applies to both small and large businesses, irrespective of their size. Businesses can further optimise the group health insurance costs in the following ways:
1. Hire More Employees
Increasing your workforce can lead to lower health insurance premiums per employee. Insurance providers often offer more favourable rates to larger groups as the risk spreads to more individuals. If expanding your team isn’t feasible, small businesses with fewer than ten employees can consider joining health insurance groups with other local companies to benefit from group rates. Remember, this is possible with certain insurers, and you can join health insurance groups only in the same state.
2. Hire Younger Employees
The younger workforce typically suffers fewer health-related issues, reducing healthcare usage. A healthy workforce balance comprising more of the young implies fewer claims may arise within your organisation. Usually, low risks are accompanied by reduced premium quotations. As such, low risks from fewer claims lead insurance companies to lower their premium rates.
3. Choose Plans with Higher Out-of-Pocket Maximums
Companies can choose insurance plans with higher out-of-pocket maximums to reduce the premium costs. Employees will be liable for a larger part of their medical expenditure up to a certain limit, and after that, the insurance will cover the rest of the expenses. The changes must be communicated to the employees so they know how much they are liable for financially. This also allows employees to use their medical policy and group health insurance to maximise their coverage.
4. Provide Preventive Wellness Programs
It encourages employees to live healthy lifestyles, which may help reduce healthcare costs. Such programs can include flu vaccinations, cancer screenings, smoking cessation support, and mental health resources. These programs have proven effective in health promotion and expense reduction. It also encourages proactive healthcare of your employees, which can increase their productivity.
5. Exclude Dental and Vision Benefits
One way of lowering premiums is through limiting coverage. Eliminating dental and vision coverage can decrease costs without hurting employee satisfaction, as many companies do not offer such benefits. Also, employees will receive coverage for various diseases and treatments from the first day of employment and choosing to opt out of less utilised coverage will not hurt them.
6. Set up Health Savings Accounts (HSAs)
High-deductible health plans (HDHPs) can be combined with HSAs so that employers and employees can make tax-free contributions to the accounts for eligible medical expenses. HSAs contributions are tax-deductible, and withdrawals for medical expenses are tax-free. In addition, HSA funds are rolled over each year and remain with employees even if they change jobs.
7. Provide Customisable Group Health Insurance
Companies are adopting customisable health insurance policies because employees can choose the coverage they need. Adding more services for a price will lower the cost-sharing burden of all employees while increasing the availability of healthcare services for those who require them. This also empowers the employees to decide on their health based on their needs.
8. Compare Insurance Providers
Comparing insurance providers helps you find the best value for your company’s needs. Even though lower premiums are attractive, you should not forget to look at network size, coverage options, and the provider’s reputation. Insurers now offer several customisation options for group health insurance.
Conclusion
Healthcare cost management requires a strategic, long-term vision. Instead of selecting the cheapest plan, assess your workforce’s needs and structure benefits accordingly. Preventive care through wellness programs can significantly reduce claims over time. Companies can also use their claims data to negotiate premiums for better rates. Companies can stay ahead by adapting policies, educating employees on smart healthcare choices, and leveraging every available cost-saving opportunity.
