Cost Saving Measures Within Employee Benefits 

Written by: Kristy Kwan, Benefit and Retirement Plan Administrator

If you’ve been pondering whether you should cut healthcare benefits, consider a word to the wise: healthcare shouldn’t be categorized as an “excess” expense. Healthcare benefits provide employees with a sense of security, boosts morale, and encourages loyalty. Perhaps most importantly, a generous healthcare package promotes a healthy, happy, and productive workforce.

Healthcare insurance can be expensive and certain cost saving measures can improve the bottom line. Therefore this article will provide you with guidance on how to evaluate your current plan needs against competing interests to save expense.

One option we recommend is looking at the way your employees use their healthcare insurance. While it is considered a privacy violation to ask employees to disclose their personal health status, it is permissible to ask employees to complete an anonymous questionnaire to learn whether your current plan is addressing employee concerns.

You may find it useful to ask employees to (a) rate the importance of premium costs versus coverage, (b) solicit their feelings regarding the networks of hospitals and doctors that are available to them, and (c) their preference of higher office visit co-pays or higher prescription drug deductibles. The results may clarify that employees prefer to pay a higher office visit co-pay in exchange for a lower premium cost, or you may find that employees don’t mind paying a little extra for the flexibility of a PPO.

This brings us to the second option for cost saving measures: evaluate the healthcare plan design. Many carriers will allow an employer to offer multiple plan choices, such as choosing an HMO and a PPO, or a combination of both. Offering more choices to your employees allows them to select plans that fit their needs. A plan with catastrophic coverage for a single person that rarely goes to the doctor, or a plan with low office visit co-pays for a family of four might appeal to employees as a “best” plan for different reasons. An employer can offer a capped contribution that allows for a specific level of coverage and allow employees to “buy up” to a plan that maximizes their personal benefit budgets.

Another option for employers is to review plans that are similar to what is currently offered, but have added cost cutting features. For example, many plans feature a deductible for prescription drugs. Frequently this deductible is only for brand name prescriptions (not for generic), and therefore employees can avoid paying out-of-pocket costs by choosing to use generic drugs. Higher co-insurance rates, such as 70% / 50% coverage (in network and out of network, respectively) versus 80% / 60% coverage can also result in saved premium dollars. The out-of-pocket costs for coinsurance generally do not affect the employee unless they are hospitalized or require services outside of a general office visit.

These suggestions represent just a few of the many ways employers can make the most of their employee benefit budgets. MMC, Inc. is happy to assist you with a review of benefit plans and can offer additional cost saving solutions. We invite you to speak with our friendly Benefit Specialists at (800) 899-MMCI (6624).

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