In 2019, Tennessee saw healthcare premium rates decline for the first time in four years. While this decrease represented a much-needed reprieve for many, healthcare costs didn’t decrease for everyone. Many companies that offer group health insurance to their employees still saw their rates increase, and even those that experienced cost reductions are still paying much more than they were before rate hikes began four years ago.
Reasons for Rising Costs
Following the passage of the Affordable Care Act (ACA), insurers struggled to adjust to the new market. Many uninsured people entered the marketplace, and because a large portion of these people had above-average healthcare needs, costs wound up being higher than many insurers expected.
Since these problems started, prescription drug prices have also been on the rise. In 2019, prices for 3,400 prescription drugs increased at an average of 10.5%. For many insurance plans, these prices are passed on to insurers.
PEOs Offer Lower Premiums
For employers that pay a portion of their employees’ healthcare, healthcare cost increases can add up quickly. Battling rising costs and wanting to offer employees the best can leave company leaders feeling hopeless. This is the case for both small and large companies.
A great option for small- to mid-sized companies to consider is a Professional Employer Organization (PEO). As part of a PEO, your business will have access to low-cost benefits usually reserved for large companies, mitigating the current trend of rising healthcare premiums. This is possible because each employee of each PEO member is lumped into one large benefits pool—so a 50-person company will be part of a group of thousands. This means that PEO health insurance rates are usually lower than the rate a company could get on its own.
LBMC Employment Partners carefully assesses potential PEO members, analyzing their risk, ensuring rates stay low and competitive. For larger companies that may not need low PEO health insurance rates, LBMC EP also offers other benefits services to negotiate the best rate possible. Here are some other options for companies seeking to lower their healthcare rates.
HSAs or Health Reimbursement Programs
Some companies are fighting rising health coverage costs by implementing high-deductible plans, which are less expensive for employers. Though, in some ways, this pushes medical expenses off on employees, employers can pair the high-deductible plans with Health Savings Accounts (which are tax-free) or health reimbursement programs to help offset personal health expenses.
Workplace wellness programs are another way employers can save money (the ACA financially incentivizes such plans). Programs can include health screenings, exercise programs, health education classes, and subsidized gym memberships. While these programs can help employers save on healthcare costs, they can be time consuming to implement. At LBMC Employment Partners, we offer wellness program management as one of our many HR services.
Creative Benefits Packages
The rising premium costs combined with ACA requirements put employers in a delicate situation. If their current benefits packages become too costly, they must find a way to make changes without pulling the rug out from under employees. LBMC EP can help companies restructure their benefits packages to assist in reducing costs while still benefiting employees.
To learn more about how LBMC Employment Partners can help your company fight rising healthcare costs, contact us today.