Article
Overcome your anxiety and strategically meet the benefits needs of your company and employees
Today is the day you dread more than any other. For weeks your stomach has been doing flips and you’ve been feeling a bit on the queasy side. What could possibly cause you to have these feelings? Well, it’s Employee Medical Benefits Day of course! This is the day when you send the annual communication to employees explaining the many changes to their employee benefits. For most companies the communication also includes the even more unpopular information about how employees will experience double-digit increases in payroll deductions in their paycheck.
The issue of controlling medical costs affects almost every company in this country. With very few exceptions, the problem of escalating medical costs is the largest or certainly one of the largest problems affecting all American companies. We can all agree that many companies are working hard to make an 8% sales and margin increase during the year just to see it eaten up by the increases in company medical expenses.
Is this a familiar scenario at your company? Is there any way to make this annual announcement about employee medical benefits a POSITIVE communication and not the NEGATIVE doom and gloom it has been for years?
Let’s start by first discussing the normal routine:
- You communicate with your benefits broker or your insurance carriers about getting quotes for the upcoming plan year.
- The benefits broker e-mails you to tell you to “brace yourself for the worst”.
- You get an official quote from the insurance carriers showing a double digit increase in rates.
- You have a discussion with the senior managers of the business to find ways to “hide” cost increases. For example, perhaps increasing co-pays by $5 or $10 will help with the increases. Or, increasing the deductibles may help with the cost burdens. Perhaps moving some prescriptions from one cost “bucket” to a more expensive cost “bucket” will offset some of the insurance cost increases.
This routine, with some modifications for every company, takes place every year throughout the United States. Is there anything companies should be doing differently?
First, you need to understand why you are offering medical insurance. Reasons such as “to be competitive with other employers” or “to take care of our people” will likely come to mind. Does your employee population truly want a full medical plan that covers all members of a family and costs the company more than $1,000 per employee per month? Even if the employees pick up 25 to 50% of the cost of the insurance, medical insurance is likely the third or fourth largest cost the company has after cost of goods sold and employee compensation.
Companies have been searching for alternatives for years, but many companies have not been taking advantage of some solutions - - or shall we say - - creative alternatives to traditional medical plans such as HMO’s and PPO’s.
Let’s look at Charlie’s situation for a minute to clarify this point. Charlie has been with your firm for 15 years. He is now in his 40’s, married with two children. He is certainly interested in having a full medical plan (such as HMO’s and PPO’s). But when he was in his 20’s, unmarried and with relatively no health concerns, he was more interested in keeping his out of pocket medical expenses as low as possible to increase his overall net pay. Ultimately, all he needed at the time was a plan that covered emergencies and occasional visits to the doctor if he got sick.
As a business owner, you should make it a priority to analyze data about your employees -- such as median age and the percentage of employees married -- in order to better understand what your employees need in terms of medical insurance. You should also consider conducting employee surveys to gather knowledge of employee wants and needs.
High deductable health plans, health savings accounts and flexible spending accounts are just a few ways in which companies are offering alternatives to traditional medical coverage. If a company has a large employee population that has similar wants and needs to someone like Charlie when he was in his 20’s, then they should be offering these types of medical plans as alternatives.
In many cases, the overall cost to the employee AND to the company can be cut in half or more for each employee that selects the High Deductable Health Plan with an associated health savings account.
So why don’t more companies offer these plans if they are successful in decreasing costs? In a word - - commitment. These plans, whether they are HSA’s, FSA’s, or high deductable health plans, can be somewhat complicated for many employees to understand.
Therefore, if your company truly wants to achieve savings in medical costs (that will benefit both the company and its employees) then it needs to be COMMITTED to education. Your company, whether it should be the Human Resources department or another expert, needs to do frequent and repetitive communications to explain:
- How these types of health plans work
- What types of employees benefit most by utilizing each plan
- The financial savings to employees for choosing one of these alternative types of plans over a traditional plan
Experience shows us that the most difficult part is getting employees to try one of these alternative plans. However, once an employee gives these plans a try and understands how they work, they are usually hooked and will continue to stay in these types of medical plans until their lifestyle (like getting married or having kids) changes.
So what should you do now?
- Gather information and understand the unique benefits of HSA’s, FSA’s and HDHP’s.
- Survey your employee population and analyze the data.
- If it makes sense to offer any of these plans, prepare a strong – and positive -- communication about the medical offerings.
- Continue to educate employees, conduct surveys, and assess new medical benefit options.
And finally, when it gets to be too much for your stomach to handle, take a TUMS and seek medical assistance immediately.
