Small businesses that provide employees with health insurance are already seeing higher costs as a result of the Affordable Care Act (ACA) and the increased administration required due to all the new rules and regulations.
Its never a bad time to start thinking building a strong, multi-year strategy for your employee benefits. Numerous insurance options are emerging for small businesses as insurers develop new products that could provide better coverage and minimize cost increases.
While employers are faced with rising costs, the need to offer a competitive benefits package remains as several factors are at play.
- Damaging morale: Declining to make this investment in employees could lead to resentment in the workplace. Associated consequences could include reduced productivity and retention problems.
- Recruiting difficulties: Deciding not to provide coverage may hurt a company’s chances to attract potential employees who view employer-provided health insurance as an important benefit.
- Reputational risks: Potential customers may take a negative view of companies that do not provide health insurance to employees. This could particularly be a concern if a company’s competitors or peers provide coverage, so it may be important for management to consider whether competitors choose to pay the penalty or provide health insurance.
Hiring part-time workers (less than 30 hours a week) may help businesses avoid the employer mandate by keeping their FTE staff under 50. But employers should tread carefully here, especially if they are considering reducing hours of current workers.
An employer should consult with legal counsel before changing hiring practices as there is a big difference in risk between cutting current employees’ hours and merely limiting future hires to part-time hours.
5 ways small businesses can save on healthcare costs:
1. Consider a Self-Insured Plan: Most large employers in the U.S. use self-insured health plans. Large employers insure their employees on their own, but they work through insurance companies to access providers and “stop-loss” insurance.
The plan essentially creates a budget for the employer and its employee base, which is paid to the insurer. If the company’s health costs are below budget, it receives a premium credit the next year. If costs are over budget, the company is responsible for those costs. The stop-loss protection may pay in cases where a particular employee incurs very high medical costs, and it is necessary because self-insurance plans are not eligible for coverage under state guarantee programs.
For small businesses, self-insured plans are becoming more prevalent through multiple employer groups and Associations such as NARFA, that offer small businesses in similar industries an opportunity to join in a larger buying group for several insurance products. Plan sponsors may have greater control in designing plan benefits and provider networks, and designing the employee cost sharing. This allows for more flexibility and options for the employers. Companies with low-risk (generally younger, healthier) employees may especially benefit from self-insurance plans.
2. Vendor Evaluation and Selection: Now, more than ever it is important to review vendors to ensure you are getting the best possible plans and products for your business. Clients and members value our “partner not broker” approach to employee benefits, as we evaluate a business’ strategy and value of current plans to the available options for each and every renewal. We also help employers save time and money through our full-service administrative capabilites, handling all enrollments, COBRA administration, claims analysis, compliance support, and much more.
3. Voluntary Benefits: Financial health is highly important everyone, and with higher deductible plans becoming more commonplace, voluntary benefits are an excellent strategy for cost control. For example, “critical illness” coverage, can pay for things conventional plans don’t. It typically pays a lump sum to policy holders hit with specific serious ailments, such as cancer or a stroke. It can fill an important cost gap for people with high-deductible plans who’d struggle to pay up-front, out-of-pocket costs for immediate health care. Voluntary benefits provide a great safety net for employees should they encounter an unforeseen circumstance.
4. Wellness Programs: Over the past several years there has been a remarkable increase in health and lifestyle coaching, smoking cessation programs and incentives or bonuses for employees who participate in fitness programs or complete health assessments. Employers are finding that wellness programs are helping not only to encourage their employees to be healthier, but they also create a sense of community within their organizations. A healthier population leads to lower health care costs and improved productivity. The NARFA Wellness Rewards program offers employees the opportunity to earn money for healthy behaviors, and the program offers a wide range of rewards.
5. Education and Communication: Employees who are well-educated about their benefits package are more likely to take advantage of their benefits. For example, a wellness program won’t help much if employees don’t know it exists or how to access it. And to make the best health care choices—which can save the company money—employees need to be fully informed of their options. Using multiple means of direct communication increases employee engagement and knowledge that will be retained about their benefits. Whether its workshops, enrollment meetings, web-based information, or a forum giving them a chance to ask questions; direct engagement is very successful. employers should avoid using a one-size-fits-all method, because it is likely to disengage a sizeable chunk of their workforce.
While the employee benefits landscape continues to change, employers should always maintain a proactive approach and have the right partner to help with strategy, compliance, finance, and administration. At NARFA, we are passionate about positioning our member businesses so that they can focus on growing their business and have the peace of mind that the strategy we put in place contributes positively to their bottom line.
For a free benefits evaluation and to get a quote, please contact us today to learn more. Since 1929 we have been a symbol of stability for our members and have a strong track record with 99% member retention rate to prove it!