Each year, some 20% of health care costs are wasted in the United States. Most of this waste is caused by a poor understanding of coverage. Proper healthcare management for businesses is, therefore, a crucial component to reduce costs. However, business health insurance and group plans can be a source of reprieve for employees and businesses, if they’re used correctly.
Unfortunately, many CTO’s simply don’t know what they can and can’t do with employee health plans. Additionally, employees are often overwhelmed by their benefit options. Complex healthcare lingo only complicates things further.
The result of all this confusion? Increased health care costs. But it doesn’t have to be that way. The first step is to figure out where your company is going wrong.
Let’s look at some of the most common healthcare management mistakes that are costing your business money right now.
1. Lack of Healthcare Cost Awareness
Ignorance is not always bliss. Companies hemorrhage money when they don’t understand the true cost of healthcare. Seemingly minor details like what a PPO charges for hospitalized visits can end up costing your business big. Additionally, if you aren’t fully aware of how much your plan pays for XYZ, how do you expect your employees to?
Time spent scrutinizing your company’s business health insurance plan is time well spent. Health care costs rise each year. Don’t be on the wrong end of those costs just because you don’t understand them.
2. Not Realizing You Can Lower Healthcare Costs
Do you assume that what you have now is the best you can get? You might be wrong. There are countless business health insurance plans in Texas, and you might have overlooked one that can save you thousands.
Some studies have shown that health and wellness programs can slow the growth of healthcare costs by up to 15%. That number can increase as your employees take greater advantage of in-house gyms, meditation centers, and other wellness benefits.
You can also save money with discount drug programs. Brokering deals with pharmacies can slash the cost of pharmaceuticals for you and your employees as well.
Simply understanding your options can save you thousands every year.
3. Not Communicating with Your HR Department Regarding Healthcare Costs
Most HR departments are under little to no direction from their manager to reduce health care costs. Healthcare management is often left to the higher ups. When those higher ups aren’t aware of this, costs increase.
Communicating with your HR department and incentivizing them to perform better reduces costs. Offer bonuses if health care spending dips. Many would gladly pursue better deals for your company if they had a reason to. With an average spending of $12,000-14,000 per employee on healthcare, there’s no better time to demand more of your HR team.
4. Not Understanding ACA Compliance
Despite recent headlines, we are still under the Affordable Care Act (ACA). That law requires employees offer compliant health insurance plans. Leaving compliance in the hands of a third party could be a costly mistake—especially if you choose the wrong provider.
Failure to adhere to ACA compliance too can result in stiff fines and wasted time spent sorting things out. Make sure you understand the benefits required by the ACA and how best to handle them in your business. We’ve also outlined these requirements in our Texas Health Insurance Plans Buyer’s Guide.
5. Shying Away from High-Deductible Group Medical Plans
High-deductible group medical plans are typically far more inexpensive than low-deductible plans. They are also surprisingly beneficial. For example, when combined with a Health Savings Account (HSA) or a Flexible Spending Account (FSA), healthcare management is easier and costs are reduced.
That’s precisely what former CEO of Whole Foods, John Mackey did for his employees. His company saved about $1,689 per individual and $782 per family than they would with the average PPO. Imagine what savings like that could do for your company. Additionally, employee’s save money on taxes thanks to tax-free savings accounts. Employees get comprehensive coverage and affordable rates and your business saves money when you choose an HSA.
6. Offering Employees “Free” Health Benefits
The saying is true. Nothing is truly ‘free’. Offering employees free health benefits severely hurts your costs. Instead, asking employees to contribute even a small portion to their benefits goes a long way to improving costs. When employees are cognizant of the costs you keep rates more affordable. Needless ER or doctor visits are greatly reduced along with costs.
7. Buying Inflexible Group Plans for Employees
If you own a small business, your business health insurance should focus on a few core benefits:
- Vision care
Additional coverage options like life insurance, accidental death, pet insurance etc. should be up to your employees to add to the plan. For those extremely budget conscious, you can even leave off dental and vision allowing employees to add that instead.
You don’t have to take away your employees’ options. Simply let them choose the care they want and enjoy greater healthcare cost savings.
8. Outdated Health Reimbursement Arrangements (HRAs)
Insurance is complicated. Healthcare management is even more complicated. The rules for HRAs constantly change, and not staying on top of these changes could be costing you big time. The ACA changed how they are used and in 2017, a new Small Business HRA was released. Not taking advantage of this offer could result in penalties from the IRS.
9. Overlooking Total Healthcare Costs
Many companies look at monthly premiums instead of the total cost of healthcare for their employees. While monthly premiums typically make up the greatest amount you’ll pay, other factors contribute to your costs. These include:
- Out-of-network costs
- Deductibles for In and Out of Network Providers
- Drug coverage costs
- Quality of Coverage
- Gated and Non-Gated Coverage Options
Each of these factors can increase your health care costs if overlooked. Paying attention to how each affects your overall premiums and what the benefits are long-term of each add-on benefit, plays an important role in healthcare management.
10. Not Getting Help from PCI to Reduce Costs
At Primary Care Insurance Solutions, we help businesses get their business health insurance in Texas under control.
We pinpoint precisely where you could be saving money, what options are available for you company’s size, and how to take the next steps. We also work with employees to help them understand their coverage and how to lower their costs over the long term.
Whether you need to design a better plan for your business or want to encourage your employees to improve their own healthcare management, Primary Care Insurance Solutions is a trusted source for countless companies in the Houston area.
Let us help you get back on track or improve your healthcare costs as they stand. Please contact our team today.
Frequently Asked Questions
Why is it important for businesses to have proper healthcare management?
Proper healthcare management is essential for businesses to reduce costs, especially when 20% of healthcare costs are wasted due to a poor understanding of coverage.
How can health and wellness programs benefit a company’s healthcare costs?
Health and wellness programs can slow the growth of healthcare costs by up to 15%. These programs encourage employees to adopt healthier lifestyles, reducing healthcare expenditures in the long run.
What are the potential downsides of not understanding ACA compliance?
Not understanding ACA compliance can result in hefty fines for businesses and wasted time trying to rectify compliance issues. It’s essential to be aware of the benefits required by the ACA and manage them appropriately.
How can high-deductible group medical plans be beneficial for businesses?
High-deductible group medical plans are generally more affordable than low-deductible plans. When paired with a Health Savings Account (HSA) or Flexible Spending Account (FSA), they simplify healthcare management and reduce costs.
Why should businesses avoid offering entirely “free” health benefits to employees?
While the idea of offering free health benefits may seem generous, it can significantly increase costs for the business. Asking employees to contribute a small portion makes them more conscious of expenses, leading to more thoughtful healthcare choices and reduced costs.