Balancing Cost and Care: Strategies for Sustainable Employee Benefits Plans
Have you ever leaned back in your office chair and wondered if your benefits plan will hold up in the long run, without sacrificing quality? You’re not alone. With rising healthcare costs, many business leaders face the challenge of balancing top-notch employee care with financial sustainability.
Nearly three-fifths of employers are grappling with this very issue. If you’re managing a benefits plan, you know firsthand how tricky this balancing act can be. Every company strives to provide high-quality benefits for their employees while ensuring long-term affordability. But, as you’ve probably experienced, that’s easier said than done.
The Challenge of Controlling Costs in a Benefit Plan
Cutting costs on benefits might seem like a straightforward solution, but it comes with significant risks. Reducing coverage could negatively impact employee morale, leading to disengagement and reduced productivity. More sick days, lower performance, and difficulties retaining top talent are expected consequences when benefits fall short of expectations.
On the flip side, offering the Rolls Royce of benefits can lead to rising premiums, especially with inflation and escalating healthcare costs. A 2022 survey revealed that 96% of employers consider affordability the top factor in selecting a benefits plan, followed closely by long-term sustainability according to the Benefits Canada Healthcare Survey.
Small and medium-sized businesses feel this squeeze the hardest, often lacking the flexibility to absorb unpredictable cost increases.
So, how do you balance the need for robust employee coverage while controlling costs? The answer lies in focusing on value, promoting employee wellness, and exploring flexible cost-sharing solutions.
Step One: Prioritizing Value over Premiums
At first glance it can be easy to get caught up in premium costs without seeing the bigger picture. But high-quality care doesn’t have to mean higher premiums. In fact, good care can reduce premiums over time. When employees receive the proper diagnosis and treatment upfront, they’ll return to work faster, leading to fewer claims and lower premiums in the long run.
The question is: will you focus on the broader picture today or postpone these crucial decisions, hoping nothing changes in the meantime? Take a moment to reflect on what matters most to your employees. What is most important, better vision care, or perhaps addressing the orthodontic needs of your younger staff’s children?
Whatever it may be, taking the time to consider these factors is the first step in building a benefits plan that genuinely impacts your employees’ well being. After all, no one knows your team better than you do.
Step Two: Encourage Wellness & Preventive Care
Having identified what truly matters to your employees and their families, you’ve taken a significant step toward promoting health and wellness in your workplace. Why is this so important? Healthier employees are more productive, take fewer sick days, and require less expensive medical care.
An increasingly popular approach is to offer discounted gym memberships or wellness programs, encouraging healthier lifestyle choices, which can lead to fewer claims.
By providing access to smoking cessation programs or support for managing chronic conditions like diabetes or asthma, in turn will help your employees maintain better health. You can also promote annual checkups and preventive measures like flu shots or diagnostic tests based on family medical history. These measures show your staff that you care about fostering a healthy ulture.
It’s also essential to recognize that providing a support system for mental health—is equally important. Workers diagnosed with depression or anxiety miss 56 and 55 days of work per year. Including mental health services in your benefits plan can significantly reduce absenteeism and improve overall productivity.
Step Three: Explore Cost- Sharing & Flexibility Options
While preventive care and wellness initiatives help reduce costs in the long term, you’ll still need to address the overall expense of your benefits program. Two approaches can help: cost-sharing and increasing flexibility.
Fully insured group benefits plans provide comprehensive coverage with minimal administrative burden but often come with higher premiums. While many companies find this a worthwhile investment, those looking to reduce costs might consider exploring cost-sharing options. Shifting from covering 100% of cost to an 80/20 or even a 50/50 split, alleviate some of the financial pressure while still offering valuable benefits to their employees
An alternative approach that is becoming more popular is a hybrid group health plan combining self-insured and insured components. For instance, your company can maintain coverage for drugs, dental, and insurance with the carrier while allowing employees to manage paramedical services through a Health Savings Account (HSA). This approach enables employees to choose what best suits their needs, ensuring that the company only pays for the services utilized, creating cost savings opportunities and flexibility for your workforce.
These strategies aim to share costs and risks between you and your employees, making benefits plans more affordable for everyone over the long term.
Taking Action: Steps to Optimize Your Benefit Program
If you’re feeling overwhelmed when it comes to all of the moving parts of a benefit plan, don’t worry—you’re not alone.
The first step to gaining control over your benefits plan is understanding where your money is going and what your employees truly need. Start by reviewing your current program, its costs, and its coverage.
Communication is key. Talk to your employees to understand their expectations and how they feel about your current plan. Be transparent about ideas like cost-sharing, HSAs, and wellness initiatives. When employees understand the benefits of these changes, they’re more likely to embrace them.
Finally, consult experts who can guide you toward a benefits plan that meets your short- and long-term goals. Take, for example, a mid-sized tech firm that was struggling to keep up with rising benefits costs while still trying to retain top talent. By switching to a hybrid plan and focusing on wellness initiatives, they not only reduced their premiums but also saw a 15% drop in employee sick days.
We know that finding the right balance between cost and care can feel like a daunting task. But you don’t have to navigate this alone. Our team is here to listen to your concerns, understand your unique needs, and help you design a sustainable benefits plan that works for your business and your employees.