HEALTH BENEFITS
4 STRATEGIES FOR REDUCING HEALTH BENEFITS COSTS IN 2022
BY BARRY E . FIELDS
Health care costs continue to rise each year , and 2022 will likely be no exception . In the new year , experts predict a 6.5 % increase in medical expenses alone , according to PricewaterhouseCoopers .
With these increases in mind , employers will want to strategize methods to rein in benefits spending . This article offers four ways to help .
1 . ALTERNATIVE PLAN MODELING
Instead of a traditional health plan , employers can offer other plan designs that benefit employees without excessive costs , such as the following :
• Consumer driven health plan models — High-deductible health plans with HSA and HRA options to offset reduced benefits under medical and prescription plans
• Self-funding models — Convert to self-insurance with a carrier or TPA , obtain stop-loss coverage , etc .
• Reference-based pricing models — Self-funded health plans where members can visit any provider and payments are based on established benchmark pricing and negotiated with the providers , if necessary , rather than traditional contracted rates
• Level-funding models — Self-funded health plans where an employer pays a set amount to a carrier each month for claims and administration , and if annual claims are lower than expected , the employer is refunded
Each of these alternatives has advantages and disadvantages . Reach out to JGS Insurance to learn more about the potential of these and other plan models .
2 . HEALTH CARE LITERACY
If employees better understand their health care options , they can save money and improve their overall well-being . Arming employees with questions such as “ How much will this cost ?” and “ Can I be treated in an equally effective but less costly way ?” can help them take better control over their health choices and make wiser decisions . Further , employees should also be taught basic concepts such as when to visit an emergency room versus urgent care , the difference between coinsurance and deductibles , and how to price shop for services .
Ultimately , the more educated employees are about health care , the more money they can save themselves and their employer .
3 . TELEMEDICINE SOLUTIONS
Telemedicine allows consumers to visit their doctor over the internet . To nobody ’ s surprise , that made it extremely popular during the height of the COVID-19 pandemic .
And that popularity isn ’ t likely to go away in 2022 . According to McKinsey & Company , only 11 % of US consumers utilized telemedicine in 2019 prepandemic whereas , as of mid-2021 , 46 % of consumers were using telemedicine to replace the in-person health visits they had originally planned .
4 . PRESCRIPTION DRUG POLICY REVISIONS
Prescription drug costs are increasing at a faster pace than medical costs . Employers can utilize employee education initiatives and some policy revisions to help control costs .
For instance , without adequate knowledge and reminders , an employee might opt for name-brand prescriptions each time they need one while generic alternatives are equally effective and significantly more affordable . This can raise prices for everyone . Also , many people are not aware that consumers may be eligible for significant discounts directly from the manufacturers for specialty medications .
Beyond education , employers can control prescription drug costs by revising their policies . This may include requiring employees to request generic medications first before covering more costly alternatives .
SUMMARY
There are many approaches for controlling benefits spending , but not all will work for each organization . That ’ s why it ’ s important for employers to closely analyze their health plan data and assess where they spend the most . +
BY : BARRY E . FIELDS VICE PRESIDENT OF EMPLOYEE BENEFITS JGS INSURANCE , A BALDWIN RISK PARTNER
Barry Fields has over 30 years of employee benefits experience advising clients in a wide range of industries , professional and industrial , public and private , throughout the United States and worldwide .
Barry specializes in providing full-service benefits consulting to clients including program design , compliance , plan funding , underwriting , wellness programs , employee communications , benefits administration , employee advocacy and the use of effective strategies in benefits management .
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