With many industries now beginning to feel the impact of the current recession, it has become more important than ever for employers and their employees to get the most value possible from their healthcare dollar. Here are 5 tips for stretching these dollars:
1. Give Options – Employer groups of just about all sizes could benefit from providing their employees with choices of health insurance plans. Bottom line is all health insurance choices are expensive. However, since most employers pay a percentage of employee premium, lower cost alternatives are lower cost for employers and their employees. Employees who are given a choice, may just take that choice electing to bear some risk themselves which, if unrealized, results in lower cost for all.
2. Offer High Deductible Plans – When evaluating your plan options, do not overlook qualified high deductible plans. Though these plans may seem like they are too much for average employees to digest or budget for, they are valuable for a segment of most employee populations. Employees are more capable of evaluating these alternatives than employers think – particularly employees who are engaged in the process and aware of their funding alternatives.
3. Flexible Spending Accounts – These plans have been around for a number of years. However, even with relatively recent expansions in eligible expenses, extension of grace period and an general increase in member responsibility from current health plans, average FSA usage is still low. These types of plans offer employers an extremely low cost way to help their employees increase their spending power for what could be a large part of their family expenses.
4. Health Reimbursement Arrangements – HRAs are tools employers can use to directly reimburse a large number of eligible healthcare expenses that their employees incur. The values of HRAs are their flexibility of design (employers can define reimbursable expenses) and their unfunded liability status. An unfunded liability (essentially a promise to an employee) is only paid when the expense is incurred. Though this approach bears some risk, the risk can be defined and budgeted. In addition, it can be funded at least in part by premium savings and any cost of a reimbursement is not a premium expense that will be subject to a rate increase each year.
5. Communicate – None of the things I have mentioned here can be accomplished without a well thought out, ongoing communication plan. These concepts are not the most riveting conversation topics. However, as the dollars (premium, copays, deductibles, etc.) rise, interest in the topics tend to rise as well. Giving employees both access to information and the tools they need to combat escalating healthcare costs are essential to building a benefit plan with the maximum perceived value.