What Your Human Resources Department Should Know
US Healthcare costs are expected to rise about 5 percent on average in 2022, to an average over $13,000 per employee. These numbers are up substantially from costs in 2021. For employers, this means higher premiums and greater expenses for the same medical coverage for your employees. Bracing your business for impact is important, and so is making sure your Human Resources Department is armed with the knowledge of why premiums are increasing, what to expect, and options for saving money in the long run. Curious about how best to prepare your business for upcoming premium hikes? Read on to learn more from the employee benefits experts at Benely.
Why are Health Insurance Premiums Increasing in 2022?
Health insurance premiums are increasing this year for a myriad of reasons, combining to create a perfect storm. One of the most significant reasons for increases in 2022 has been the pattern of delays in obtaining care that occurred in 2020 and 2021. While the CDC cautioned everyone to stay at home, explore telemedicine options, and delay procedures, costs were lowered in the short term for 2020 and some of 2021. However, long term, delays in obtaining care (or even missing check ups) equate to higher health care costs in the long term.
When care is delayed, medical conditions go undiagnosed, and are left untreated for too long, compounding issues that could have been nipped far earlier. In 2022, expect health care visits and spending to return to pre-pandemic levels – and for premiums to reflect it.
Care delays from the past two years combine with all the usual price hike suspects to create a strain on insurance companies. As with almost any other industry in 2022, health care institutions are facing labor shortages, wage inflation, and supply constraints at every level. Hospitals and other care providers are also grappling with new regulatory transparency requirements, putting pressure on their balance sheets and staff capacity.
Should our Company Raise the Percentage of Employee-Paid Medical Coverage?
Over time, analysis proves that price hikes in insurance premiums are nothing new. In fact, data from the Kaiser Family Foundation Employer Health Benefits Annual Survey Archives collected in the years 2001, 2006, 2011, 2016 and 2021 indicate that coverage premiums for a family have risen from an average of $7,061 in the year 2001 to an average of $22,221 in the year 2021. This marks an exorbitant 20 year increase of 215 percent, compared with cumulative rate of inflation at only 57 percent during that same period. A 215 percent rise sounds steep, but it’s a number that may not shock Human Resources or Benefit Administration vets.
Data shows, then, that over the past two decades employers have had to handle the persistent challenge of premium increases. The typical reaction for employers faced with rising health care costs would be to shift the increase to employees by raising the employee-paid premium percentage for medical coverage or raising copays and deductibles. However, in the last several years, we’ve seen the opposite to be true. In 2022, only 38 percent of employers are shifting rising health care costs to their employees, down from 47 percent in 2021.
Employees’ growing demand and appreciation for employee-provided benefits certainly help explain this change. In a robust job market where employers compete for top talent, it may not make sense for your company to handle the problem by simply increasing the employee-paid percentage of healthcare premiums.
Fortunately, there are more creative ways to address the problem. Below, the employee benefits experts at Benely detail how employers can save on health insurance premiums without sacrificing quality of care or shaving away attractive benefit offerings.
How Employers can Save on Health Insurance Premiums in 2022
Despite a projected increase in premiums, there are many ways for employers to watch their benefits budget. Potential areas for cost savings include the following:
- Promotion of Telemedicine Visits When Effective: Many employers provided telemedicine coverage beginning in 2020. While employees should always be encouraged to see a doctor in person when needed, smaller issues and general health questions can still be addressed via telemedicine practices. Telemedicine visits typically cost less for insurers, keeping your premiums a bit lower.
- Actively Prioritizing Behavioral and Mental Health: It’s no secret that employees are more stressed than ever, which can lead to spikes in anxiety and depression. Employees suffering with behavioral and mental health concerns are less productive at work, and more likely to experience physical health symptoms requiring later treatment, including heart issues, diabetes, and musculoskeletal problems. One of the most budget-friendly aspects of prioritizing behavioral and mental health is the compatibility of treatment with telemedicine technologies. Often, care from a counselor or licensed psychologist can be provided via phone or video chat, saving your business money in both the long and short term.
- Offering More Narrow Networks: The Society for Human Resources Management reports that around 30 percent, or nearly one third of employers are either considering or planning to offer a more limited network of health care providers and doctors while still maintaining a network that is high-quality.
- Encouraging Wellness on and off Campus: The Society for Human Resources Management also reports that 55 percent of employers currently promote or offer health and wellness activities onsite, and another 17 percent are either considering or actively planning to do the same. If you need a hand revamping your wellness benefits, the employee wellness experts at Benely can help. Benely partners with Wellworks For You, a leading provider of wellness programs that motivate your employees and produce excellent return on investment time and time again.
- Evaluation of Specialty Drugs: The cost of outpatient prescription drug coverage is expected to rise almost 8 and a half percent, according to a 2022 Health Plan Cost Trend Survey gathering data from almost 80 insurance providers, managed care organizations, pharmacy benefit managers, and third-party administrators. This increase in price is driven in large part by new specialty drugs and their costs. The Society for Human Resource Management indicates that over half of employers, through their medical plan, currently evaluate the costs of specialty drugs and their correlated health outcomes. Another 29 percent are either considering or actively planning to implement the same evaluation processes going forward in an effort to keep premiums low.
- Adding or Highlighting Centers of Excellence within your Network: The Society for Human Resource Management reports that 48 percent of employers, or around half of those surveyed, utilize centers of excellence within their health plans, and another 23 percent are either planning to implement the strategy. This coverage model involves paying a bit more for coverage at high quality hospitals and clinics. Centers of excellence often specialize in particular procedures, such as cancer treatment or joint replacement, and provide particularly cost effective care to patients. The practice lessens health care costs and premiums in the long run, minimizing complications and the need for repeat procedures and follow ups down the line.
- Providing Health Care Concierge Services. As the fact of health care shifted in recent years, the introduction of health care concierge services has made a splash. Concierge medicine is a model wherein doctors charge patients a retainer fee in exchange for complete access to medical services at their office. Doctors charge a flat monthly fee for unlimited access to their services as part of this model. Many employers have taken advantage of concierge services; in fact, around a third of employers currently offer their employees access to concierge services, and a quarter of employers are either considering or actively planning to join them. Care concierge services can provide patients with integrated care management programs, and help employers save money in the long term.
- Implementing Medication Adherence and Monitoring Programs: Many patients do not take prescribed medications as frequently as they should. Currently, 13 percent of employers have addressed this problem through the provision of medication adherence support systems, and a sizable 30 percent of employers are considering or planning to offer similar services. Implementing these systems can substantially reduce health care concerns for the life of a patient and help insurers and employers alike save on costs.
Need a Hand Revisiting or Restructuring Your Benefits Packages?
Thinking of streamlining your employee benefits package, implementing or revamping an employee wellness program, or just need to revisit your coverage offerings? The employee wellness and benefits team at Benely has you covered. Contact Benely or request a free demo today to get started.