You may be asking yourself why should you provide health care benefits to your employees – especially in the face of 15 to 30 percent annual cost increases.
At the end of the day, it is likely because you believe it is the right thing to do for your employees and their families. And, it’s an essential component to remaining competitive in a marketplace that seeks to hire and retain the same top-tier talent.
But how do you afford healthcare that is rising at 30 percent and consumes up to three percent of your budget? Understanding how to control these costs while at the same time providing this benefit is critical to your overall success.
As a business owner, how can you continue to offer your employees health care while still protecting your bottom line? Establishing a sound financial strategy should incorporate forward-thinking methods to contain ever increasing health care costs. Below are just some of the strategies to employ that will allow you to successfully plan for growth.
COST SHIFTING TO EMPLOYEES
One method of putting downward pressure on the increase in your healthcare premiums is to shift the cost to your employees. This can be accomplished through high deductible plans that generally have deductibles of $1,500 or more per person.
There is a downside, however, to this approach. Employees on the lower end of the pay scale have difficulty paying their bills. A study by the Kaiser Family Foundation found that 26 percent of employees with high deductible insurance could not afford the healthcare they need.
RESTRICTED PLAN CHOICES
Embracing plans that restrict the spectrum of provider choices to a narrow field allows carriers to effectively negotiate for lower prices with providers. These cost savings are typically passed on to consumers.
DEFINED CONTRIBUTION PLANS
As the cost of health care continues to climb, a key alternative worthy of consideration is a defined contribution health plan.
As the employer, you set the contribution level. Employees receive an established amount each month (say $500). The employee uses this fixed allowance to purchase a plan that best meets their needs and budget, and you can still offer the same types of plans – HMO, PPO, HSA, etc., with varying deductibles. Those who select more basic coverage will end up contributing less out-of-pocket. This defined contribution plan offers three key benefits for businesses:
- The ability to protect against unknown and unmitigated health insurance cost increases
- The ability to plan and budget appropriately
- The ability to continue to offer health insurance for its employees and employees benefiting from group purchasing power
At TGG, we provide every employee – no matter the role they play – the same health care benefits. In doing so, we convey that everyone is integral to the success of the company. We also know exactly what our healthcare spend will be the following year whether we maintain the same contribution level or increase it across the board.
With the right strategy and planning, you can create a win-win for your employees and your business. Providing a competitive benefits package can help you successfully compete for top-tier talent.
TGG can help guide you through the maze of choices available to ensure you are protecting your employees and your bottom line.
Let’s guide your success . . . together!
To learn more about the options that work for you and your industry, contact us.