For the past two decades, health costs have increased each year. This happens for a variety of reasons, such as inflation or, say, a global pandemic. With that in mind, employers can bank on prices going up in 2022.
According to a PricewaterhouseCoopers (PwC) report, medical costs are projected to increase 6.5% in 2022. This is about average for the past decade; although, it is slightly lower than the 7% increase projected this year (as more spending goes toward the COVID-19 pandemic).
Yet, 6.5% is still a considerable increase, especially when so many budgets have been reallocated or slashed due to the pandemic. That’s why employers must think both strategically and creatively about how they can lower their health benefits expenses in 2022.
This article includes five ways to help reduce spending without compromising benefits quality.
1. Control Drug Spending
Drug prices are rising faster than any other medical service or commodity. Prices are now 33% higher than they were in 2014, according to GoodRx. This is a significant problem during inpatient procedures, where individuals aren’t usually given an option to select a generic medication—patients rarely know what drugs they’re given until after the fact. Even in routine prescription scenarios, employees may be prescribed name-brand medications simply due to physician preference.
Employers can educate employees on the price differences between name-brand and generic medications. Doing so can help employees understand that they can save money while still receiving the same quality treatment.
Additionally, employers may consider introducing varying levels of prescription drug coverage. For instance, fully covering generic prescriptions or drugs used for chronic conditions. For higher levels (e.g., specialty drugs), employers may cover less of the costs. Ultimately, employers will need to determine the appropriate coverage levels for their unique workplaces.
2. Encourage Active Benefits Participation
Beyond drug spending, employers can help limit overall health costs by making employees active participants in their health care. This means encouraging employees to improve their health literacy, research treatments and price shop.
Price shopping, in particular, should be easier in 2022, given the new hospital price transparency rule that takes effect Jan. 1, 2022. Employees will now be able to see specific prices for procedures and other services. This incentivizes employees to educate themselves before making costly health decisions.
3. Offer Savings Accounts with Carryovers
Health plans with savings components are becoming more popular each year. That’s because these tax-advantaged savings accounts empower employees to control their own spending and improve their health literacy. The accounts include health savings accounts (HSAs), flexible spending accounts (FSAs) and others.
Many accounts allow for fund carryover year to year, or allow employers to add that option onto their plan designs. Allowing carryover encourages employees to contribute more funds, since they’re no longer “use it or lose it.” Since many employers match contributions up to a limit, more money added to these accounts means greater tax savings for everyone.
4. Embrace Virtual Health Options
One major takeaway from the COVID-19 pandemic has been that virtual solutions can offer high-quality outcomes. This is so true that many companies are allowing employees to work remotely permanently. Virtual health options are no exception to this trend.
There are countless telehealth services available these days. Individuals can connect with health professionals in just a few clicks—no waiting times or driving to a clinic. Additionally, individuals will not need to take large chunks of time off work, allowing for greater productivity. As such, telehealth solutions are often much less expensive than a typical in-person doctor visit. Even the Centers for Medicare and Medicaid Services (CMS) acknowledges the usefulness of telehealth services, seeking to expand access.
Employers can consider adding telehealth services into their plan designs. In some cases, it may be cost-efficient for employees to schedule a virtual health visit before an in-person appointment, under certain circumstances. In any case, having a telehealth option expands access to care and lowers expenses for everyone.
5. Consider Plan Funding Alternatives
A more drastic option for reducing health costs is restructuring how plans are funded. For instance, a self-funded plan may be more cost-effective than paying a monthly premium for a fully insured plan. Other options include level-funding or reference-based pricing models, each of which carries its own set of administrative rules and legal constraints.
Funding decisions should not be taken lightly and should be based on several factors, such as the size of an organization, risk tolerance, and financial stability. Employee financial stability should also be considered, especially while the effects of the COVID-19 pandemic can still be felt. Employees may not be able to burden large premium increases, constraining some plan funding flexibility options.
Historically, employers have shifted costs onto their employees (usually through higher premiums) as a way to reduce spending. However, that trend is not expected to be widespread in 2022. Considering the tight labor market and how many individuals are struggling financially due to the pandemic, employers will likely be hesitant to shift too much of the burden. Doing so may cause employees to seek other jobs or simply forego preventive care, which can lead to chronic conditions and higher future health care costs.
Employers have a variety of ways in which they can help contain health care expenses. Choosing the right method will depend on unique employee populations and budgets.
Reach out today for help strategizing your best options.
While there may be some overlapping challenges in the path to parenthood, how individuals build their family is ultimately unique to them. The pandemic has only added to the worries and challenges for people trying to build their families, as COVID-19 lockdowns kept potential parents and children separated, and most fertility treatments were stalled in 2020. As restrictions loosen and more health care services resume, the demand for family planning services is on the rise again. Family-building benefits can offer holistic support to employees as they navigate their journeys to parenthood.
With open enrollment right around the corner, employers have an opportunity to provide unique benefits and serve a diverse workforce. This article discusses how employers can explore and offer family-building benefits to help attract top talent, support employees and decrease health care costs.
Family-Building Benefits Overview
Family-building benefits are becoming increasingly popular with employees around the country, as they inclusively support the unique and complex ways that individuals and couples build their families. Such benefits can provide employees peace of mind as employers demonstrate their emotional and financial support for employees’ decisions to build a family.
Benefits designed to help employees create their families can take many different forms. Here are some of the most common ways employees may be building their families and how employers can support them through benefits:
- Fertility Treatment—One in 8 couples have trouble getting pregnant or sustaining a pregnancy, according to the Centers for Disease Control and Prevention. Fertility treatments can help. They often include medications and are sometimes combined with surgical procedures. Two of the most common fertility treatments are intrauterine insemination (IUI) and in vitro fertilization (IVF). Fertility benefits may cover anything from an infertility diagnosis and medication to IUI and IVF procedures. Due to high procedure costs, traditional coverage plans typically cover genetic or diagnostic testing and maybe one round of IUI or a partial round of IVF.
- Donors and Surrogacy—Donor sperm, donor eggs or embryos, and surrogates are often used by single people or same-sex couples who want to have a baby. Donor sperm and eggs may also be used if an individual’s own is causing infertility. These benefits typically take the form of cash reimbursements.
- Adoption—Adoption benefits are typically similar to those available to new biological parents. Paid or unpaid leave for adoption and financial assistance from employers has been trending to include all new parents. This benefit can be relatively inexpensive because few employees use it. Still, the inclusive support of all new parents is an opportunity to build a good employer brand for being considerate to and supportive of employees.
Not only is building a family physically and financially tough, but the process can also take a massive mental toll on the individuals and couples who want to become parents. Therefore, comprehensive benefits may also extend to counselor visits and other mental health resources.
For additional support, employers are turning to third-party insurance providers that focus on providing supplemental policies to fill in the gaps of traditional health plans.
Why Employers Are Offering Family-building Benefits
Benefits to support family building began shifting beyond traditional coverage of infertility treatment even before the pandemic. As employers evaluate their benefits offerings before open enrollment season, they should be aware of several competitive advantages that may come with offering family-building benefits.
Boosted Employee Retention
First and foremost, family-building benefits can be an important component of the overall benefits package. Benefits matter more now than ever to employees in a post-pandemic workplace. And, family-building benefits may be more desirable to employees than more standard benefits, such as student loan repayment assistance and critical illness insurance.
The family-building or infertility journey is taxing, and having an employer’s financial and emotional support can help alleviate some stress for those employees. As a result, family-building benefits can help employees feel happier and more fulfilled at work, which can translate into stronger employee loyalty. According to a survey by FertilityIQ, 61% of employees who received fertility coverage from their employer reported feeling more loyal and committed to their employer. Additionally, 88% of women who had their IVF fully paid for by their employer returned to the workplace after maternity leave. These numbers make it clear that employers can take care of their business by caring for their employees.
Family-building benefits can be advantageous to the millennial workforce. According to a Mercer study, 68% of millennials consider fertility preservation and infertility coverage when choosing an employer. Furthermore, the growing number of single people and same-sex couples planning families suggests an increasing need for surrogacy or adoption benefits. Meaningful benefits can be part of a robust employee attraction and retention strategy.
Increased Employee Productivity
Employees struggling with infertility or managing other family-building issues are often stressed and distracted—both at home and work. That can lead to employees being preoccupied and less productive in the workplace. Employees who feel supported are less stressed, less distracted at work and, therefore, more productive. When some of the stress of their path to parenthood is alleviated, employees can show up stronger in the workplace.
Inclusive Employee Support
Growing social equity concerns are driving employers to reevaluate benefits plans to meet the needs of a diverse and changing workforce. Comprehensive family-building benefits demonstrate that the organization cares about all its employees. Family-building benefits can be valued by employees, regardless of their gender identity or relationship status. This benefit can provide services for single and LGBTQ employees as well as heterosexual and same-sex couples who depend on fertility treatment for their family-building journey.
In turn, when employees feel welcomed and supported in the workplace, employee engagement and retention are likely to increase. This can also help boost the organization’s employer brand to current and prospective employees and the public.
It’s also important to keep in mind that both men and women experience infertility equally. According to the American Society for Reproductive Medicine, approximately one-third of infertility is attributed to the female partner, one-third to the male partner, and one-third to both partners or is unexplained. Because infertility can impact anyone, regardless of gender, these benefits can be valuable to all employees, not just one group.
Health Care Savings
A comprehensive, family-building benefits package can reduce organizations’ health care costs and improve outcomes. A managed fertility benefit that provides clinical oversight throughout an employee’s fertility journey allows employers and employees to lean on the fertility experience and the knowledge of those managing the benefit. As a result, that can increase the possibility of a successful and healthy pregnancy and birth, which may decrease pharmacy, neonatal intensive care unit and other costly related expenses.
Despite the need for family-building services, such care is inaccessible to many due to the cost. As a result, more employers are considering and offering family-building benefits to support their current and prospective employees inclusively. Comprehensive benefits like adoption and surrogacy matter to today’s diverse workforce, and employers can demonstrate support for their employees by introducing or expanding their family-building benefits.
Reach out to Consociate Health to learn more about family-building benefits and how to best support employees on their unique paths to parenthood.
Reports suggest that employees who put off job searches during the pandemic are likely to resume them in earnest this fall, leading to a “turnover tsunami.” Employers should recognize that they have a significant opportunity to retain employees if they begin open enrollment efforts early in 2021. Revamping benefits offerings can help demonstrate to employees they are valued and convince top performers seeking new jobs to remain.
However, benefits are only powerful retention tools if employees see value in the offerings. Many employees expect some perks and arrangements made necessary during the pandemic, such as telecommuting, to remain. Therefore, employers must tailor their offerings to include such benefits.
Employers will also need to spread the word about their open enrollment and available offerings. Countless surveys show that employees want more help understanding their options. These results mean an open enrollment communication plan needs to start early, provide ample educational resources and have multiple channels. Reach out today for help enhancing benefits offerings and getting the word out to employees.
In early 2021, employers across the country were surveyed about various employee benefits and human resources topics, and roughly 150 organizations responded. The information collected demonstrates how employers across the country are utilizing their voluntary benefits. Most importantly, it shows how some are using voluntary benefits to combat the lingering effects of the COVID-19 pandemic. Here are some key takeaways from the survey:
Employers Are Exploring Holistic Benefits
Employers are beginning to expand offerings to include more holistic benefits. These include cancer insurance, critical illness insurance and financial counseling. In fact, employers who do not offer such holistic benefits say they are likely to add them in the future.
Employers Are Acknowledging the Importance of Telemedicine
The vast majority of small employers are offering some form of telemedicine. During the COVID-19 pandemic, telemedicine has proven to be a useful and cost-effective way to receive medical care. Many employers intend to retain this benefit for the foreseeable future.
Employers Are Torn on Which Plan Changes to Make
Some employers want to maintain their benefits’ status quo; others are considering plan changes to help reduce costs. Only a small portion of employers are looking to spend more money on benefits. Since they are usually 100% employee-sponsored, voluntary benefits can help round off a benefits package without raising overall costs.
Contact us today to learn more.