There’s been a consistent rise in the cost of health care in the last decade. According to the Kaiser Family Foundation, the average cost of employee health insurance premiums increased by 4 percent in 2021 from the previous year to $22,221. On a macro level, premiums for individuals and families increased 22 percent over the last five years and 47 percent over the last 10 years.
We’ve highlighted a few solutions that will enable employers to control their health care costs while providing affordable and quality health care.
Choosing the Right Plan
Employers have options when it comes to providing employees with health coverage. They can choose a fully insured health insurance policy, where they pay a fixed monthly premium to an insurance company to cover the anticipated costs of health care claims, regardless of whether employees use the plan.
They can also choose a self-funded plan, where they pay for employee claims directly as the claims are submitted. The plan, typically administered by a third-party administrator (TPA), facilitates claims processing and payments, the health care networks and the financial reporting. An advantage to self-funding is that employers are given additional control and flexibility of designing their own health plan to meet the unique needs of their employee population. Employers can also analyze trends and utilization patterns to see where their money is being spent.
Some employers also have the option of joining a unique plan, such as Western Growers Assurance Trust, where employers work together to purchase health care benefits. WGAT, available only to members of Western Growers, is dedicated to offering health benefits for the ag industry. WGAT is tax exempt and governed by a Board of Trustees who contract with health providers to design plans to meet the needs of its members.
Plan design is a critical element in controlling health costs. When choosing a plan, there are several things employers should consider that have a significant bearing on cost:
• Setting deductibles. Employers can re-evaluate the amount employees are required to pay before the plan begins sharing the cost of covered services.
• Differentiating co-payments. Employers can offset their premiums by adjusting their co-payment amounts for primary care providers and specialists.
• Co-insurance amounts. Employers can evaluate co-insurance options and consider a higher co-insurance percentage to offset their costs.
• In-network and out-of-network amounts. An employer can determine in-network and out-of-network amounts and control how much a participant is responsible for paying. For example, a plan can offer to pay 80 percent of an in-network amount and require plan participants to pay the remaining 20 percent. Similarly, for out-of-network services, the plan can offer to pay 60 percent of the amount while the participant is responsible for paying 40 percent of the cost.
• Provider networks. Custom networks or narrow networks will prove a more significant savings than broader networks.
• Generic prescriptions. Employers can incentivize participants to use generic drugs.
Because plan members use pharmacy benefits more than any other benefit, it’s important for employers to choose an effective Pharmacy Benefits Manager (PBM) who will work to make sure drugs are administered correctly and that employers aren’t overpaying. Effective PBMs should also have a solid understanding of medications and drug classes to help identify wasteful spending. A PBM can help improve medication adherence rates and work with members to decrease barriers to fill prescriptions.
Implementing a health management program can also assist employees in managing their chronic health conditions, improving health outcomes, and preventing related risks and complications, ultimately reducing the cost of medical care and hospitalization.
Keeping Employees Informed
The right corporate culture can contribute significantly to health savings. According to a recent survey by Voya Financial, 35 percent of employees don’t understand their health care benefits.
• Improve communication and educate employees about their plan offerings.
• Make sure employees understand the providers in their network and also remind them to use urgent care instead of going to the emergency room in non-life threatening situations.
• Make benefits materials easily accessible for employees so they can make better health decisions.
If you’re interested in a WGAT plan, contact Western Growers Insurance Services for more information at (800) 333-4WGA. For more information or questions regarding third party administration or self-funding, please contact Pinnacle Claims Management at (866) 930-7264.