4 Strategies for Reducing Health Benefits Costs in 2022

4 Strategies for Reducing Health Benefits Costs in 2022

Health care costs continue to rise each year, and 2022 will likely be no exception. In the new year, experts predict a 6.5% increase in medical expenses alone, according to PricewaterhouseCoopers. With these increases in mind, employers will want to strategize methods to rein in benefits spending. Below, we highlight four methods to consider but it is always recommended you consult with your broker about the best solutions for your company’s needs.

4 Strategies to Help Reduce Health Benefits Costs

1. Alternative Plan Modeling

Instead of a traditional health plan, employers can offer other plan designs that benefit employees
without excessive costs, such as the following:

  • Consumer-driven Health Plan Models- High-deductible health plans with HSA and HRA options to offset reduced benefits under medical and prescription plans
  • Self-funding Models- Convert to self-insurance with a carrier or TPA, obtain stop-loss coverage, etc.
  • Reference Based Pricing Models – Self-funded health plans where members can visit any provider and payments are based on established benchmark pricing and negotiated with the providers, if necessary, rather than
    traditional contracted rates
  • Level-funding Models- Self-funded health plans where an employer pays a set amount to a carrier each month for
    claims and administration, and if annual claims are lower than expected, the employer is
    refunded

Each of these models has advantages and disadvantages. Talk to one of our Benefits experts that can help you decide what’s right for your organization.

2. Health Care Literacy

If employees better understand their health care options, they can save money and improve their overall well-being. Arming employees with questions, such as “How much will this cost?” and “Can I be treated in an equally effective but less costly way?” can help them take better control over their health choices and make wiser decisions. Further, employees should also be taught basic concepts, such as when to visit an emergency room versus urgent care,
the difference between coinsurance and deductibles, and how to price shop for services.

Ultimately, the more educated employees are about health care, the more money they can save themselves and their employer.

3. Telemedicine Solutions

Telemedicine allows consumers to visit their doctor over the internet. To nobody’s surprise, that made it extremely popular during the height of the COVID-19 pandemic. And that popularity isn’t likely to go away in 2022. According to McKinsey & Company, only 11% of US consumers utilized telemedicine in 2019 pre-pandemic whereas, as of mid-2021, 46% of consumers were using telemedicine to replace the in-person health visits they had originally planned.

4. Prescription Drug Policy Provisions

Prescription drug costs are increasing at a faster pace than medical costs. Employers can utilize employee education initiatives and some policy revisions to help control costs. For instance, without adequate knowledge and reminders, an employee might opt for namebrand prescriptions each time they need one, while generic alternatives are equally effective and significantly more affordable. This can raise prices for everyone. Also, many people are not aware that consumers may be eligible for significant discounts directly from the manufacturers for specialty medications.

Beyond education, employers can control prescription drug costs by revising their policies. This may include requiring employees to request generic medications first before covering more costly alternatives.

Happy People at Work

Contact us today to connect with a benefits expert on our team, who can help you make sure you have appropriate coverage and can help you find the right solution for your employee benefits strategy.

DISCLAIMER

This material has been prepared for informational purposes only and was generated from information provided to BKS from the client and/or third-party sources. Therefore, BKS makes no warranty or representation(s) as to the accuracy or appropriateness of the data and/or the analysis herein. This information is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your tax, legal and accounting advisors for those services.

No Comments yet!

Table of Contents

Protecting high-net-worth assets amid current challenges
Effective Strategies to Help Overcome them Rising inflation, high insurance rates, and massive lawsuits...
Maximizing Your Relationship with Your Broker
So you decided to work with a broker to make the insurance purchasing process as seamless as possible....
happy employees
4 Considerations to Help Keep and Attract Workers
The major life-shifting events of the past two years have taken a toll on everyone. In fact, a 2022 Household...
Get in contact with an advisor today to see how BKS can support you.