In the face of rising health costs, you may be looking to change your health plan to save money or achieve compliance with the ACA. One important aspect to look at for any plan is the cost of the insurance premium. The choice of a high- or low-premium health plan can be a tricky one because each type has its own merits and is suited for specific employee types. Lower premiums mean huge savings in terms of monthly contributions, but employees will have higher deductibles and co-payments to pay before insurance becomes effective. In contrast, higher premiums cost more each month, but they may provide more coverage to reduce employees’ out-of-pocket costs.
In the past few years, many employers have been moving to high-deductible health plans because they represent big savings for the company. The most apparent benefit of a high-deductible policy is the low premium for the employee and the business. Money saved on insurance premiums with an HDHP can be used to fund tax-free Health Savings Accounts to help employees pay for health care costs.
Low-deductible plans typically have much higher premiums. While employees pay more each month, they find that more is covered when they receive nonroutine care. This type of plan typically benefits older employees, employees with chronic conditions, or employees who know that they will have nonroutine needs.
One option is to provide different plans for employees to chose from to suit their needs. However, if that’s not realistic for your business, you will have to choose the plan that works best for the most employees while fitting with your business needs. In choosing the right insurance premium for your employees, you should consider the following:
Age and Health Condition of Employees
Younger, healthy employees needing little health care will benefit from lower premiums and higher deductibles. Employees with higher health care needs, however, will reap the rewards from high-premium, low-deductible plans, as they offer more comprehensive coverage.
Often, you won’t know the true health status of your employees, and you won’t be able to ask. Many conditions that affect employee health costs are invisible, meaning some healthy-looking employees may have chronic conditions that affect their costs of care. Also, don’t forget to consider the health status of your employees’ dependents.
Cost of Health Plan
The ACA requires employers to cover at least 60 percent of the costs of medical care to avoid penalties. Employers can choose to cover more than 60 percent if it makes sense for their situation. Evaluate the amount that your company is willing to put toward health care for each employee. Once you know what you can budget, you can evaluate how you will split the premium costs with your employees. Look at the options for employee costs while ensuring that it’s considered affordable by the standards of the ACA and that you will be compliant with the percentage of costs that you must cover.
What Your Employees Want
A health survey is a good way to let employees weigh in on the range of medical care that they would like covered and whether they prefer a high- or low-deductible plan, as explained by the Centers for Disease Control and Prevention. Without employee input, your chosen health plan may not match up with employees’ needs, resulting in you overspending on health care or not covering a key service that many employees need. Allow employees to respond anonymously if they prefer to maintain privacy. One caveat is that many employees think they want a low-premium, high-deductible plan because they only focus on the amount coming out of their paycheck. Ensure that employees have access to resources to help them estimate how much their total out-of-pocket expenses (monthly premium plus copay and out of pocket costs) would be with each type of plan.
Preventative Care Measures
Under the ACA, most insurance plans must cover certain preventative care measures with no cost to the patient, according to the Kaiser Family Foundation. In addition to making employees aware of these preventative services, you can encourage your employees to stay healthy through incentives such as fitness club memberships and savings on healthy products and services such as smoking-cessation programs. Evaluate the cost of these programs versus the benefits they provide by reducing or preventing health problems.
Once you’ve chosen the right plan with the best insurance premium for your business, you should review it regularly to make sure that it still meets your employees’ ever-changing needs and matches your company’s current budget. To judge satisfaction levels with the current plan, allow employees to provide regular feedback. In choosing the right insurance premium, you should be both conscientious and pragmatic in your decision so that the outcome benefits you and your employees.
Emmie Sahlan has a graduate degree in English and has been writing professionally for the past five years. Her niche areas are insurance, credit cards, personal finance and education.