It is no surprise that employee healthcare ranked among the top concerns for employers in the 2017 state of small business report which was recently released.
Where employers can decide how much of a raise they give their employees every year, the spiraling cost to provide quality healthcare to employees continues to put financial pressure and employers who are also trying to increase profit grow revenue, and manage cash flows to run the day-to-day operations of the business.
Where you would think that growing revenue increase in profit would be the primary concern for employers of all sizes, this employer size breakdown suggest otherwise:
Employer Concerns by Size
5-10 Employees: Employee Healthcare ranked 5th, Increasing Profit was #1
11-50 Employees: Employee Healthcare ranked 3rd, Hiring New Employees was #1
51-100 Employees: Employee Healthcare ranked #1, Hiring New Employees was a close 2nd
This trend continued for employers over 100 lives, and suggests the close connection between hiring new employees and providing them quality healthcare. The foundation of our healthcare system relies on employers to be the distribution model to support the system, and yet it continues to be a major concern for employers instead of – at times – hiring good people and or running a profitable business.
Areas of Concern for Employers
Employer Mandates: initially deferred, for larger employers there is a concern over the mandate to provide healthcare to a certain percentage of employees. A recent survey from AON reports that 48% of employers list employer mandates as their primary concern after the recent election.
Employee Mandates: individuals have faced penalties if they go without healthcare there by driving up participation and overall employer healthcare costs.
Auto-Enrollment: The new ACA guidelines allow unprecedented access to healthcare without being able to collect and screen major medical impairments which can increase healthcare costs and overall lost productivity.
Reporting Requirements: New reporting and compliance regulations create exposure for employers over 50 lives and require increased oversight and labor/management to file needed forms to satisfy the reporting guidelines.
Technology can play a major role in reducing the burden placed on employers in a number of ways; from enrollment to education to reporting, employers should look for ways to streamline the process and reduce management expenses where possible.
Here are a few strategies for employers to consider as they look to control their overall health care spending:
Plan Design: many employers are taking a look again at the overall design of their health care package. Weighed against usage, we do see employers going to higher deductible options to address more of a catastrophic healthcare need.
Covered Participants: while many employers will pay all or a good majority of the healthcare cost for the employee, some employers are cutting back on spousal and dependent coverage. Additionally, some employers will be more stringent on a part-time definition for employees looking for healthcare.
Local Networks: there is a reason that HMO plans increase in popularity, it is due to the lower cost and more restrictive access to in plan providers. Many insurance companies have now developed provider networks for a local area that provide access to coverage at a lower cost than a plan that has a national network.
Health Savings Accounts: going to a higher deductible plan and including a health savings account to handle day-to-day expenses continues to be an attractive way to not only reduce healthcare costs but keep the employee more involved in their overall benefit utilization.
Health and Wellness: creating incentives for people to live a healthy lifestyle continues to be the best way to reduce overall health care costs. Coupled with wanting to create an environment where you have happy employees, this is likely the best approach for small to midsize employers who are looking to control healthcare costs.
While the concern around healthcare costs continues to be an issue for small employers, this is a concern that should not go unaddressed. Take a look at the benefits package to ensure that the benefits are creating the culture you want as you bring on new employees. A winning culture is essential to allow great employees to help your business succeed and reach those desired financial goals.
DHill Financial, LLC is an independent insurance agency focused exclusively in protection solutions for businesses and the people they support. The core mission is to provide current and relevant insurance counseling in an environment which fosters comfort and confidence for all parties. Licensed for life insurance and health solutions around the country, the agencies success is built on listening to the needs of our clients, and then reviewing the available options in the market with unbiased analysis. It is our independent thinking and our unwavering commitment to only offer insurance solutions when appropriate that our client’s sense immediately. Trust, Knowledge, Caring… Come feel the difference. www.dhillfinancial.com