After pay, employee benefits are the second largest contributor to an organization’s labor costs – and those costs are on the rise.
Not only are costs rising because employees are looking for more robust, competitive benefits packages with unique offerings, but even basic costs like health insurance premiums march upwards.
Based on data collected from 50 Northeast Ohio companies, here are the top strategies you can execute at your workplace to prevent and better manage rising health insurance expenses.
Local Trends: Data Matters
First, let’s confirm what the data says is happening in the marketplace.
This feeling of inevitability is more than just a feeling. Looking specifically at health insurance renewal rates, ERC’s own research is a perfect illustration of how health insurance is driving up benefits costs for Northeast Ohio employers.
As seen in the chart below, after reaching a low point in 2020, insurance renewal rates have reversed course to an upwards trajectory, with the 2022 average in double digits for the first time in many years.
Short-Term Cost Management
While it’s nice to know that your organization is not alone in receiving a renewal quote in the teens (or higher) for the coming plan year, it doesn’t pay the bills.
Based on our research, we see employers taking several different approaches to manage their increased costs in the short term. Most commonly, employers surveyed plan to share the costs of the increase with their employees.
On the extreme ends of the spectrum, 12% of employers are absorbing the entire increase themselves, and 2% of employers are passing along the increase exclusively to their employees. Finally, 18% of employers indicated that while they may be splitting or absorbing the higher costs for now, they are also making plans to shop and move to a new carrier and/or plan.
Actionable, Long-Term Strategies
Apart from immediate reallocation of costs, Northeast Ohio employers have a variety of health care priorities for the coming year. Interestingly, the three priorities that rose to the top of the list also happen to be effective long-term cost-control strategies.
Top 3 Health Care Priorities of Employers for 2023
1. Educate employees on becoming better health care consumers
Make sure you are providing your employees with the information they need to make smart health care choices for themselves and their families – both in terms of cost and care.
This is especially true if your organization is adding or shifting to a different type of health insurance plan, i.e., a more consumer-driven model. And don’t forget about Generation Z, they may be young, but now is your chance to help them set good habits early in their career and become well-educated health care consumers.
2. Create or evolve wellness programming
As we approach the third anniversary of the outbreak of the COVID-19 pandemic, wellness programs have become almost a foregone conclusion.
Taking your wellness program up a notch can not only be a money saver as preventative health behaviors improve, but it can also help set your organization apart in terms of a larger benefits package that you can present to employees and candidates.
3. Manage premium costs through risk management
Talk to your broker about alternative health insurance plans and programs. They can even help your organization assess what health plan options are best based on your workforce demographics and insurance usage.
While these are mainly cost-control measures, these three priorities have another important common thread. They all have an end goal of improving the overall health and well-being of your employee population. Save money AND end up with a healthier workforce – that’s a win all around!
Kelly Keefe, SHRM-SCP