When times get tough economically, both businesses and individuals alike examine how they can cut expenses. For a business, this could mean looking for ways to cut costs in the employee benefits program. Health benefits, which carry the highest tab in most companies’ benefits programs, might seem like the most reasonable target for cost cutting measures. But before taking a knife to your health plan and/or other aspects of your company’s benefits program, it’s important to consider the possible consequences and alternatives. Large premium increases can cause employees to drop coverage, in particular younger, more healthy employees, leaving your plan with a less desirable risk pool. Cost-shifting that involves higher copayments and/or deductibles can cause employees to defer routine care, delay seeing a doctor when symptoms of illness first arise, and fail to fill prescribed medications. In the long run, these decisions can end up not only costing your health plan money, but also add to absenteeism and disability costs and lower employee productivity and morale.
As an alternative, make sure that your benefits dollars are being applied to measures that enhance employee health and well-being. These include:
- Generous coverage for preventive care.
- Incentives for participation in activities designed to detect potentially serious medical conditions, such as health risk assessments and health screenings for blood pressure, cholesterol and blood sugar levels.
- Incentives for participation in other wellness activities, such as smoking cessation classes, weight loss efforts, nutrition counseling and fitness activities.
- Making available employee assistance programs (EAPs). An EAP can be particularly important to employees during trying economic times, providing a resource for or referral to financial counseling, as well as stress management and crisis intervention services.
If cost shifting is a must, there are ways to soften the impact on employees:
- Flexible spending accounts (FSAs) enable employees to pay for health care expenses with before-tax dollars. This lets employees get the most out of the dollars they use for health care.
- Consumer-directed health plans (CDHPs), which couple a high-deductible health plan with a health savings account (HSA), make employees more conscious of how they are spending their HSA dollars, since these funds can carry over year after year.
- Voluntary benefits can add a wide range of personalized options to an employer’s benefits program, at little or no cost to the company. At the same time, they offer employees cost savings and convenience over finding and purchasing these benefits on their own in the individual market.
All of the above require employees to become more involved in the management of their benefits and of their own health. Whether it be participating in wellness activities, keeping on top of scheduling regular preventive care, thinking ahead and budgeting for anticipated health care needs, or researching provider networks to find the most appropriate care at the most cost-effective price, all of these measures enhance individual involvement. And, in the long run, the individual responsibility your employees assume for their health care and benefits management can serve as one of the most important cost-management tools you’ll ever find.