Insurers are requesting increased healthcare premiums in 2017, making decisions difficult for employers who offer group plans. In some states, including Tennessee, some insurers are seeking double-digit rate increases. State insurance regulators are in charge of evaluating these requests to assess if they are fair. Ideally, the rates will come back lower than requested after review.
Reasons for Rising Healthcare Costs
One reason for the rise in premiums is insurers that are still adjusting to the implementation of the Affordable Care Act (ACA). By and large, healthcare costs were greater than insurers had expected them to be in past years. Those who signed up for healthcare, who previously had had no coverage, tended to have more healthcare needs, resulting in a higher cost of care. In simple terms, more health services provided equals more money spent on healthcare.
The age of population receiving health insurance also factors in. More elderly people, who tend to have more health issues, signed up for coverage, and fewer young people than expected participated in the healthcare marketplace.
Prescription drug prices are on the rise, and as of late, generic drug prices are increasing as well. What’s more is that the more expensive specialty drugs on the market are only continuing to rise in price.
PEOs Offer Lower Premiums
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. No matter the number of employees, rising healthcare costs can affect the health of the company’s bottom line.
A great option for small to mid-size companies to consider is a Professional Employment 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.
LBMC Employment Partners carefully assesses potential PEO members, analyzing their risk, ensuring rates stay low and competitive. With that said, PEOs are not for all industries.
- What if your company falls into this category?
- How can you combat rising costs?
HSAs or Health Reimbursement Programs
Some companies are combatting 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. Learn more about encouraging healthy lifestyles in the workplace.
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, while still offering a competitive (though altered) benefits package.