Yes, the price of health insurance is still rising. But that’s no surprise. Companies have nervously anticipated that news annually for a long time. The good news—or as good as it gets—is that the rise in employer healthcare costs per employee has plateaued over the last few years.
According to the Society for Human Resource Management (SHRM), employer healthcare costs in 2019 are expected to only experience about a 6 percent hike from 2018. That’s certainly not inconsequential, but it roughly matches the year-to-year increases from the previous five years. Over that period the annual rate boost has ranged between about 5.5 percent and 7 percent. It’s been worse.
SHRM also reports that the average cost of employer-provided health insurance in 2019, including employee contributions and out-of-pocket costs, will reach nearly $15,000. Employer healthcare costs per employee will be about 70 percent of that total, or some $10,400 per worker.
So the good news is somewhat limited, but business leaders must make the most of whatever positive trends can be found in this critical cost category. What else can they do?
And that’s the question CEOs, benefits managers, and business owners are asking themselves—what else can they do? As the average cost of employer-provided health insurance in 2019 is likely to continue to rise, though at more manageable levels than in previous years, organizations must look at all options to hold down costs as much as possible.
After all, while a 6 percent increase is not anywhere as dramatic as some seen in the past, it’s still as much as three times the rate of inflation. That means that businesses probably won’t be able to raise the price of their products or services to cover the increased expense. And employees aren’t likely to get raises that offset the paycheck shock.
Here’s what some employer groups are considering and implementing:
Boosting employee contributions. It’s an idea—though not necessarily a good one. It’s always a high-risk move to shift the burden of cost to valued workers, and this is especially true when the economy is humming and they have a buyers’ market of employment options. Besides, increasing employee healthcare premiums is about as good for morale as salary cuts during bad times.
Adding high-deductible plans to the menu. This has some appeal to younger and healthier employees, who don’t anticipate the need for any coverage but in an emergency. By combining high-deductible plans with the availability of health savings accounts, such employees can feel relatively well-protected financially, but at a lower cost to both parties. Some employers even contribute to worker HSA accounts and find that they’re paying less than what they’d pay for traditional coverage.
Promoting healthcare spending education programs. An informed healthcare consumer can be a powerful ally in the ongoing battle to control costs. Employees who realize how their actions impact costs may choose to act more responsibly. Some insurers offer care advocacy services – such as Hoopayz – to steer employees toward preventative medicine and more cost-efficient care. And, while the jury’s still out on the cost-saving potential of wellness programs, it makes sense that exercise, nutrition, smoking cessation, and stress reduction education and support will encourage healthier living and better-adjusted employees—and that might lower healthcare costs.
Reducing administrative costs. The time and labor involved with managing healthcare plans is often the biggest burden organizations face. That’s why it’s worth looking into software solutions that can help benefits managers save time tracking and reporting healthcare data and gain accuracy in the results.
One such advantage is offered by Integrity Data. Our ACA Compliance Software Solution integrates easily into any ERP or payroll system and enables easy management of year-end compliance reporting to the IRS as well as year-round eligibility tracking and affordability monitoring.
Managing the challenge
The bottom line is that healthcare will remain a challenge, but business leaders shouldn’t be rattled by any predictions of employer healthcare costs in 2019 continuing to rise. The increases will continue along a more gradual or incremental pattern as they’ve been in the past, and there are options out there to soften the blow and help rein in those insurance rate increases as much as possible.