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Lower 2023 Health Premiums | PA Employee Benefits Agents

For the past two decades, health costs have increased each year. This happens for a variety of reasons, such as inflation or, say, a global pandemic. With that in mind, you can be sure health prices will go up again in 2023.

According to a PricewaterhouseCoopers (PwC) report, medical costs have increased an average of 7% each year for the past decade. If trends continue, 2023 will see another 7% increase in medical costs. This is a considerable increase, especially when so many budgets have been reallocated or slashed due to inflation and the tail-end of the pandemic.

That’s why you have to think both strategically and creatively about how you can lower your health benefits expenses in 2023.

Here are six ways you can reduce spending without compromising the quality of your benefits.

1. Control Drug Spending
Drug prices are rising faster than any other medical service or commodity. Prices are now 33% higher than they were in 2014, according to GoodRx. This is a significant problem during inpatient procedures, where people aren’t usually given an option to select generic medication — in fact, patients rarely know what brand of drugs they’re given until after the fact. Even in routine prescription scenarios, your employees may be prescribed name-brand medications just because it’s what their physician prefers.

By educating your employees on the price differences between name-brand and generic medications, you can help them understand how they can save money while still receiving the same quality treatment.

Additionally, you may consider introducing different levels of prescription drug coverage. For example, consider fully covering generic prescriptions or drugs used for chronic conditions. For name-brand or specialty medications, you could cover a percentage of the cost. Ultimately, you will need to determine the appropriate coverage levels for your unique workplace.

2. Encourage Active Benefits Participation
Beyond drug spending, you can help limit overall health costs by making your employees active participants in their health care. This means encouraging employees to improve their health literacy, research treatments, and shop around for prices.

Price shopping, in particular, should be easier in 2023, given the new hospital price transparency rule that took effect January 1, 2022. Your employees can see specific prices for procedures and other services. This incentivizes employees to educate themselves before making costly health decisions.

3. Offer Savings Accounts with Carryovers
Health plans with savings components are becoming more popular each year. That’s because these tax-advantaged savings accounts empower employees to control their own spending and improve their health literacy. The accounts include health savings accounts (HSAs), flexible spending accounts (FSAs) and others.

Many accounts allow for carryover of funds from year to year, or they allow you to add that option to your plan designs. Allowing carryover encourages employees to contribute more funds, since the money is no longer “use it or lose it.” Since many employers match contributions up to a limit, more money added to these accounts means greater tax savings for everyone.

4. Embrace Virtual Health Options
One major takeaway from the COVID-19 pandemic has been that virtual solutions can offer high-quality outcomes. This is so true that many companies are allowing employees to permanently work remotely. Virtual health options are no exception to this trend.

There are countless telehealth services available nowadays. You can connect with health professionals in just a few clicks — no time spent waiting or driving to the clinic. Additionally, people don’t need to take large chunks of time off work, allowing for greater productivity. As such, telehealth solutions are often much less expensive than a typical, in-person doctor visit. Even the Centers for Medicare and Medicaid Services (CMS) acknowledge the usefulness of telehealth services, seeking to expand access.

You can consider adding telehealth services into your plan designs. In some cases, it may be more cost-efficient for your employees to schedule a virtual health visit before an in-person appointment, under certain circumstances. In any case, having a telehealth option expands access to care and lowers expenses for everyone.

5. Consider Plan Funding Alternatives
A more drastic option for reducing health costs is restructuring how plans are funded. For instance, a self-funded plan may be more cost-effective than paying a monthly premium for a fully insured plan. Other options include level-funding or reference-based pricing models, each of which carry their own set of administrative rules and legal constraints.

Funding decisions should not be taken lightly and should be based on several factors, such as the size of an organization, risk tolerance, and financial stability. Employee financial stability should also be considered, especially while the effects of inflation and the COVID-19 pandemic can still be felt. Employees may not be able to afford large premium increases, constraining some plan funding flexibility options.

Historically, employers have shifted costs onto their employees — usually through higher premiums — as a way to reduce spending. However, that trend is not expected to be widespread in 2023. Considering the tight labor market and how many people are still struggling financially due to inflation and the pandemic, employers will likely be hesitant to shift too much of the burden. By doing so, employers may cause their employees to seek other jobs or simply forego preventive care, which can lead to chronic conditions and higher future health care costs.

Most new employees who are entering the workforce belong to Generation Z. Millennials and Gen Z, who now make up the majority of the workforce, actively seek out employers who encourage good health in all aspects of their lives: physical, emotional, mental, social, and financial.

At first glance, creating a wellness program like this may seem more expensive than it’s worth. However, a study done by the National Association of Health Underwriters found that as much as 70% of employer health care spending could be attributed to the results of behavioral and lifestyle choices. Holistic wellness programs emphasize educating your employees about their life choices and offering incentives for them to lead better, healthier lives.

You have a variety of options to help contain health care expenses. Choosing the right method will depend on your business’s unique employee population and budget.

Reach out today for help strategizing your best options.

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