Reducing Company Health Care Costs

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September 7, 2016
Rising health care costs can slash through your company’s budget. The average cost of health care benefits makes up 7.6% of an employer’s annual operating budget, according to this 2016 SHRM Healthcare Benchmarking Report. And with health care expenses expected to grow another 6.5%, companies are seeking doable solutions to offset the costs. Here are some cost-saving tips to think about:

1. Offer wellness programs. A healthy employee reduces costs associated with chronic illnesses like diabetes, heart disease, and type II diabetes. Provide incentives for weight loss, smoking cessation, and fitness, and offer programs for stress management, alcohol, and drug abuse. Empower your workers to take charge of their health. It’s a win-win situation—your employees are healthier (think more productivity and less sick days) and your health care expenses go down.

2. Switch to a high-deductible health plan or increase co-pays. Yes, this increases costs for your employees, but there are ways to soften the blow. Offer health savings accounts to offset rising expenses. Or consider a personal health coach program where medical questions can be asked over the phone, reducing outpatient visits. Also consider telemedicine programs which can save employees over half the cost of an appointment to an outpatient family doctor.

3. Develop a defined contribution approach. Just like companies have gotten away from pension plans in exchange for 401(k), some businesses are using a similar policy for health care. Employees are given a lump sum to use at their discretion for health-related expenses. Once that money is spent, the employee makes up the difference.

4. Condense drug options. Partner with a pharmacy benefit manager, a go-between for the insurance and employee, who offers prescription saving options. Most programs provide cost savings for mail-in prescriptions and generics. PBMs also negotiate lower prices with pharmacies.

It’s true that you can’t control the cost of health care. But there are ways to shoulder the burden and reduce your expense. Wish you didn’t have to deal with benefits at all? That’s another great reason to staff with That’s Good HR—we pay your temp employees’ health care costs for you. It’s just one way we can help your company thrive in good economic times and bad.