There's no question about it — small business health insurance costs can be a major concern for business owners. In fact, The Society for Human Resource Management (SHRM) estimates employers will spend nearly $15,000 per employee on health insurance premiums in 2019. This means an employee earning $50,000 will cost the company nearly $70,000 annually in just salary, taxes and insurance — and that doesn't even include a number of other expenses you can expect to incur.
With the rising cost of healthcare, what options do employers have to keep costs predictable and affordable? Here are four of the most successful strategies we've helped employers implement.
Reevaluate your plan every year.
Even if you don't plan on changing health insurance providers, it's important to obtain quotes from a number of providers every year as it can provide leverage for negotiation. This process can be quite tedious as extensive information about your workforce is required in order to produce a quote, but working with a Professional Employer Organization (PEO) can help alleviate the burden. Keep in mind how important it is to compare apples to apples; if you're trying to get better premiums on a low-deductible plan, ask for competitor quotes on an identical or very similar plan.
While most benefits providers will ease up on premiums when they know you're looking elsewhere, some won't, and that's okay, too. Employers often change benefits providers when they realize what's out there and how it can improve their bottom line and their employees' health, wellness and access to services.
Invest in a wellness program.
While establishing a wellness program takes time and effort in the beginning, it can reduce costs overall by promoting preventive healthcare — like physicals, mammograms and lifestyle changes — over reaction, which consists of ambulance rides and emergency services, and becomes very costly very quickly. While some wellness programs pay incentive dollars out to employees who participate, others don't and still drive positive results. If you don't have the internal resources, a PEO or third-party wellness vendor can help.
Look at the whole package.
Conducting an annual survey to find out which benefits are valued by employees and which benefits aren't can help you invest in the most meaningful areas and get the highest return on investment. Learning what employers in your area are offering can be helpful, too, as they're often your competition when it comes to hiring top talent in the region. These two measures alone often give employers the opportunity to save money and increase their return.
Be inclusive when thinking about cost and return.
Managing healthcare costs requires an all-inclusive look at ROI. When determining the potential ROI for a benefit change, keep in mind that adding, taking away, increasing or reducing benefits can have an impact in areas of the organization you may not expect, such as:
Recruitment Costs: Better benefits make it easier to recruit top talent.
Time-to-Fill:A competitive benefits package can reduce time to fill for open positions. In organizations with shift work, this can also reduce overtime and incentives when staff are required to pick up open shifts in the meantime.
Engagement: Employees who are happy with their benefits package often feel more valued overall and are more invested in their work.
Productivity: Engaged employees perform better overall and use their time more wisely than disengaged employees.
Quality: Engaged employees do better work overall.
Absenteeism: Employees with access to healthcare services and wellness programs are less likely to call in sick (or worse, show up sick).
Customer Satisfaction: A great benefits package can lead to healthy, happy, engaged employees, improving the customer experience.
Your benefits package is a critical component of your overall employee experience and, subsequently, your customer experience. Engaging the services of a PEO can take the guesswork out of managing healthcare costs and provide the logistical support you need to design and implement practices that work for your employees and your bottom line.