In today’s unpredictable U.S. health care landscape, businesses are struggling more than ever to provide competitive health benefits while controlling rising costs. Next year, U.S. employers project a 9% increase in health care plan costs – 2.6% higher than last year’s budget increases. Each employee covered by company health plans will cost $16,000 annually.
Small and midsize businesses (SMBs) are finding it particularly daunting to offer competitive health care plans compared to their larger competitors. A single hospital claim can cost a company over $100,000. Employers struggling with these rising costs often look for assistance from external organizations specialized in fighting claims and managing benefits administration.
Continue reading to discover key strategies that can help your business manage its health care costs and optimize employee benefits for the coming year.
What Type Of Medical Insurance Does My Business Need?
There are two primary types of medical insurance:
Fully funded
- This is the most common option, where insurance rates are set based on factors such as age, gender, and location.
- While easy to manage, businesses have little insight into how their plan is performing – such as how well the plan controls costs, processes claims, and manages employee health care usage.
Level funded
- This option provides greater transparency, as it’s based on the health of the group, size of the company, and expected usage.
- This gives SMBs a better understanding of their plan’s performance and predict renewal costs.
- However, it can be more unpredictable, especially for smaller groups, because they’re tied to the group’s health and claims history. A single high-cost claim can cause unpredictable spikes in renewal premiums, making budgeting less stable compared to fixed premium plans.
Given these options, businesses should ask critical questions when selecting a health insurance partner. SMBs need to consider factors beyond the deductible, such as copayments and the maximum out-of-pocket costs.
Catastrophic Claims
Catastrophic claims, where serious injuries result in permanently preventing an employee from working, now account for over 20% of cost increases. Without proper audits and cost-control initiatives, SMBs are at the mercy of health care providers.
Measures that can have a positive impact on cost savings include:
Case management
- Health care professionals coordinate complex care for employees to ensure they receive appropriate treatment, helping avoid unnecessary services and reducing overall costs.
Disease management
- Employers can reduce expenses associated with emergency medical care by offering guidance and resources to support employees with chronic conditions.
Nurse advice lines
- Services such as 24/7 hotlines offer immediate medical advice, assisting employees in preventing excessive emergency room visits by providing expert guidance over the phone.
Claim audits
- Reviewing medical bills ensures accuracy and helps catch errors or overcharges.
Rising Cost Of GLP-1 Drugs
A major driver behind the increase in prescription drug costs is the rising demand in Glucagon-Like Peptide-1 (GLP-1) drugs, such as Ozempic, Wegovy, and Trulicity. Commonly prescribed to treat diabetes and obesity, GLP-1 drugs are responsible for over 75% of the increase in costs. These medications, ranging from $1,000 to $1,500 per month, can quickly strain an employer’s budget.
Providing employees access to more affordable services like telehealth, coaching, or gym membership reimbursements also allows you to support their healthy lifestyle change without breaking the bank.
Medical Provider Costs
“Your worst-case scenario is what you need to plan for,” -GMS’ Benefits Sales Manager, Claire McCarus
To combat these rising costs, SMBs should design a plan that includes:
Dependent eligibility audits
- A process that reviews and verifies that all dependents enrolled in a company’s health plan meet eligibility requirements.
High deductible health plans (HDHP)
- Insurance plans that offer lower premiums but require employees to meet higher deductibles, meaning they must pay more out-of-pocket costs before full coverage begins.
Spousal surcharges
- Additional fees are charged when an employee’s spouse has access to their own employer-sponsored health insurance but chooses to remain under the employee’s plan.
Formulary changes
- Adjustments to the list of prescription drugs covered by a health plan, aimed at promoting cost-effective medications and managing rising drug expenses.
At Group Management Services (GMS), we offer highly competitive health care plans that help business owners effectively manage rising health care costs. On average, our plans are 26% lower for individuals and 15% lower for families compared to the U.S. market.
What About Ancillary Benefits?
Ancillary benefits, such as dental, vision, life insurance, and disability, are an affordable way to enhance your benefits package without the high cost of medical insurance. Offering these supplementary benefits can also boost employee satisfaction and retention at a lower cost.
Partner With GMS
Managing your company’s health care plan is stressful and expensive, especially for smaller businesses. As health care costs continue to increase, you’ll want to start looking for ways to cut down on claims and prescription drugs and reorganize suitable medical plans for your business.
If all of this sounds daunting – don’t worry. There are companies with the sole purpose of helping you manage the backend complexities that come with running a business. Outsourcing to a partner like GMS can simplify the administrative burden, providing a dedicated team to handle employee inquiries, manage claims, and even oversee the Consolidated Omnibus Budget Reconciliation Act (COBRA) administration.
This support helps ensure nothing falls through the cracks, enabling employers to focus on their business rather than the complexities of benefits administration. Contact us here so we can help your business reduce avoidable expenses and alleviate the stress associated with managing employee benefits.