Suzanne Lucas

Budgeting for Health Care: 4 Tips for Success

Budget season is upon us, and one of the top concerns of any business is budgeting for health care. With health care costs expected to increase by 6.5 percent, according to PwC, this is something businesses can’t overlook. How can you still provide quality health care for your employees without breaking your own budget?

1. Be Prepared

Working the new costs into the budget should be easy if your business has been highly profitable this year. While employees may prefer to see an increase in cash in their paychecks rather than the business covering additional costs, companies should absorb as much of the increase as possible. Remember, the Affordable Care Act limits the amount you can charge employees, but it doesn’t prohibit you from taking on additional burden. Your employees should know about the increases in health insurance costs, so they recognize their hidden raise.

If your business’ books for 2018 are predicted to look a lot like 2017’s books, or you expect a drop in income, the increase in health care costs can wreak havoc on your budget. A 6.5 percent increase doesn’t sound terrible, but when you couple that with the previous years’ increases, you see that a tremendous amount of money has been going towards health care costs.

2. Don’t Decide on Your Own

If you’re responsible for choosing and administering the health care plan, then you might be tempted to go forward and do it the best you can, but that would be the wrong approach. Ask your staff what’s important to them. Would they prefer to keep the same plan at a higher cost or would they prefer to move to a cheaper plan and see less — or hopefully none — of an increase? What’s the consensus of the staff?

Of course, it’ll likely be impossible to come to a decision that will make everyone happy, but giving people input into the decision will make the outcome better for all. They’ll feel that you have heard their feelings and concerns.

3. Consider Cutting Costs in Non-traditional Areas

Salaries and benefits come from one side of the budget while capital expenditures come from another. But, it doesn’t have to be that way. When you consider where to find the money for the increase in health insurance, keep all options on the table. Do you need all the space you rent now? Could you save money by allowing staff members to telecommute? Could travel be replaced with video conferencing in most cases? Look at everything, keeping in mind that your people are the most important aspect of your business.

4. Ask Your Health Care Broker for Ideas

Health care brokers are prepped with the best ideas for reducing your overall costs. Can you implement a wellness program? Can you consolidate your services so that medical, dental and vision insurance are all from the same provider? Can you require that maintenance prescriptions come from a mail order pharmacy? Ask away and see where you can make changes. Even small savings add up.

Caution: Make sure your employees can still see their preferred physicians and use the local hospitals. All the cost savings in the world don’t do any good if you can’t actually see a doctor when you need one.

The most important thing to do as you’re budgeting for health care is facing it head on. Don’t ignore it hoping the problem will go away.

Suzanne Lucas spent 10 years in corporate human resources, where she interviewed and hired employees, managed the numbers and double-checked with the lawyers. Her writings have appeared in Inc. Magazine, CBS MoneyWatch, US News, Readers Digest and other publications. She focuses on helping businesses nurture great employees and helping employees enjoy great careers.