As a small business owner, finding quality, affordable healthcare can present a significant challenge—especially with the skyrocketing costs of healthcare.
In fact, in a national study conducted by Small Business for America’s Future, healthcare costs are one of the top concerns and burdens for small business owners.
With increasing healthcare costs and the negative impact of the COVID-19 pandemic, protecting the bottom line and providing quality, affordable healthcare for small business owners seems like a pipe dream.
At the end of the day, reducing healthcare expenses is one of the most important ways small businesses can remain profitable and competitive. The good news is you can utilize many strategies and tips to start saving money on healthcare costs without compromising your employee’s healthcare quality.
In this post, we’ll explore these money-saving strategies, employee education and communication, and cover various healthcare plan options.
Exploring Cost-Saving Measures
The most effective way for small business owners to save on healthcare costs is by proactively implementing cost-saving measures. These include introducing wellness programs, health savings accounts (HSAs), and employee education on healthcare utilization.
Wellness programs are designed to encourage employees to maintain a healthy lifestyle. A healthy lifestyle means fewer healthcare complications and a reduction in healthcare costs.
Some examples of wellness programs include:
- Health screenings
- Smoking cessation programs
- Gym memberships
By incorporating wellness programs, small business owners can improve not only their employees’ health but also their bottom line. This is because wellness programs contribute to lower healthcare costs, reduce the total number of sick days used, and increase productivity.
Health Savings Accounts (HSAs)
If you’ve been searching for small business health insurance coverage options for even a minute, you might have already encountered HSAs and HRAs.
Although the two are both types of tax-advantaged accounts, there is a key difference between a health reimbursement arrangement (HRA) and a health savings account (HSA).
Health savings accounts (HSAs) are a cost-saving measure that small business owners can consider as an option. An HSA is a type of savings account that comes with a tax advantage and can be used to pay for medical expenses.
HSAs let employees set aside pre-tax money to pay for qualified expenses such as deductibles, coinsurance, and co-payments. Additionally, HSA funds will roll over if they remain unused year to year and may earn non-taxable interest and earnings. However, the caveat is that you can only contribute to an HSA if you have a high-deductible health plan.
Finally, HSA accounts can help improve employee satisfaction because it allows employees more control over their healthcare spending. HSA accounts provide a way to empower employees to make informed decisions regarding their health, which can benefit the business’ bottom line.
Employee Education on Healthcare Utilization
Educating your employees on how to use their healthcare services wisely can contribute greatly as a cost-saving measure. For example, educating employees on the importance of preventive care, avoiding unnecessary medical procedures, and using in-network providers can help drastically reduce healthcare costs.
Other examples of employee education on healthcare utilization include holding workshops, working with a healthcare consultant, and providing educational materials.
Negotiating Healthcare Costs
In healthcare, what you see isn’t what you pay. As a small business owner, you understand that business is business, and most businesses are open to negotiation.
The first step in negotiating healthcare costs is reviewing your current plan. Take the time to go over your plan and identify areas where you think you may be able to reduce costs. For example, you may be able to lower your rates by going with a higher deductible plan or even by bundling services.
Another strategy to reduce costs is to join a healthcare-sharing ministry or a group purchasing organization. These groups and ministries will negotiate costs on behalf of their members, which can save significant amounts of time and money for small business owners.
When it comes to healthcare, it pays to take the time to negotiate rates and shop around for the best prices.
Finally, consider working with a consultant or a broker. These healthcare professionals can negotiate costs on your behalf. Many times, it may end up being more beneficial due to their expertise in the field and experience helping small businesses find cost-effective healthcare solutions.
Employee Wellness Incentives
Incentives are a powerful motivator, regardless of industry. One of the main goals of these incentives is to improve your employees’ overall health and well-being. By providing employee wellness incentives, you encourage a healthier lifestyle and behavior. This ultimately results in healthcare cost reductions, increased productivity, lower sick days, and potentially less turnover from team members.
There are many ways you can offer an employee incentive. For example, you could offer financial incentives such as discounts on certain products or bonuses for reaching specific milestones such as losing weight.
If financial incentives aren’t your cup of tea, you can also offer other benefits, such as healthy food options or even gym memberships.
It’s important to keep in mind that one of the main advantages of employee wellness incentives is to improve employee job satisfaction, retention, and morale.
Understanding Healthcare Plan Options
Understanding the various plan options available is essential for small business owners to select the right coverage while also managing their costs. Healthcare plan options for small business owners include:
- High deductible plans (HDHPs)
- Health Maintenance Organizations (HMOs)
- Group health plans
High Deductible Plans
A high-deductible health plan (HDHP) is a business health insurance option that has comparatively lower monthly premiums than other plans. However, high-deductible plans, as the name states, come with higher deductibles, meaning that employees must pay more out of pocket before the plan kicks in.
Deductibles have no set price, as they will vary depending on the plan and carrier. However, these plans generally can be expected to have much higher premiums than other insurance plans.
For example, the minimum deductible for self-only HDHP plans in 2023 is $1,500 and $3,000 for family coverage.
More often than not, HDHP plans are an excellent option for employees who are relatively healthy and don’t anticipate substantial medical expenses.
However, for employers and employees who require consistent medical care, it may be a risky option as the expenses can quickly add up.
Health Maintenance Organizations (HMOs)
HMO plans are a type of group health plan that requires employees to select a primary care physician to act as a central coordinator. This means that the primary care physician the employee selects will be responsible for coordinating their healthcare needs, such as referring them to a specialist when needed.
HMO plans will generally come with a lower monthly premium and out-of-pocket expenses than other plans. However, the caveat is that these plans also come with more restrictions on the providers that employees can visit. This may be a disadvantage depending on your employees’ needs.
One of the biggest advantages of an HMO plan is that employees can be sure they receive the most appropriate and cost-effective care. This is thanks to the primary care physician acting as a gatekeeper of sorts, only referring when it’s absolutely necessary.
Additionally, HMO plans will typically cover preventive care services such as cancer screenings and annual physicals at no additional cost to the employee.
Overall, HMO plans can help reduce costs for both the business and employees because these plans will negotiate lower rates with most healthcare providers.
An HMO, like an HSA, may be a good option for employers and employees who are relatively healthy and don’t anticipate the need for constant specialized care.
Group Health Plans
Group health plans are designed to cover an entire group of employees, typically at a lower cost than individual health plans. One of the benefits is that group plans can be customized based on the business and employee needs.
Some factors include company size, employee age, and the overall health of the group in question. Because of this, the cost can vary greatly.
One of the main benefits of group health plans is that they can help employers attract and retain their more talented employees. This is because group health plans tend to be less expensive than purchasing an individual plan in the marketplace on their own.
There are many types of group plans, including health maintenance organization (HMO) plans, preferred provider organizations (PPO), and point-of-service plans (POS).
Tips for Selecting the Best Healthcare Plan
Small business owners should always consider the following when selecting a healthcare plan:
- Employee needs
- Plan cost
- Coverage options
At the end of the day, the best healthcare plan for a small business will ensure that its employees’ needs are covered as much as possible while remaining affordable for the business.
Some other tips when selecting a plan include the following:
- Making sure the plan includes the providers that your employees need
- Considering the cost of prescription drugs and ensuring that there’s enough coverage for the medications your employees may need
- Considering the plan’s flexibility and whether it can be customized to your business and employee needs
- Ensuring that the premiums and deductibles are affordable for the business and employees
Maximizing the Benefits of High-Deductible Plans
There are several ways small business owners can turn high-deductible plans into a cost-effective healthcare plan option—and it involves learning how to maximize the plan’s benefits.
As already discussed, one way is to use HSAs. With an HSA, employees can contribute pre-tax dollars to their accounts, which can be used to pay for qualified medical expenses. Additionally, if your employees are healthy and don’t use the funds, they will roll over year to year and potentially earn interest as well.
Negotiate Healthcare Costs
Another way to maximize the benefits of a high-deductible plan is to effectively negotiate healthcare costs. Small business owners can and should take the time to negotiate rates with healthcare providers and shop around for the best prices.
A part of the negotiation can be to include preventive care at no or low costs. This way, you not only save on rates but also, by encouraging employees to get regular check-ups and preventive care, you can help identify and treat health issues before they become seriously costly issues.
Finally, one of the most important ways to maximize the benefits of high-deductible plans is to provide healthcare cost transparency. By providing transparency, you’re giving your employees a way to make informed decisions about their healthcare.
Some examples of healthcare transparency include:
- Allowing employees to compare prices for services
- Offering employee education on using their healthcare benefits effectively
- Providing clear cost estimates
Making the Most of Health Maintenance Organizations (HMOs)
High-deductible plans aren’t for everyone. Fortunately, if you have HMO plans in mind, there are also several ways you can save on healthcare costs.
The first is to select the right HMO plan. In your search for health coverage, you’ll come across various types of HMO plans. Be sure to compare all the plans available and watch for the one that provides the most coverage at the lowest cost.
When considering cost and coverage, be sure to note the plan’s deductibles, co-payment amounts, and how many healthcare providers they have available. This is because using in-network providers can help maximize the benefits of HMO plans. In-network providers are generally less expensive due to their contracted prices with insurance companies. By having access to a large network of providers, both employees and the business can save money.
Reducing healthcare costs by encouraging employees to use services wisely, like avoiding unnecessary medical procedures and preventive care, can help businesses negotiate rates.
Lastly, educating employees on HMOs and how they work can be an excellent way to make the most of these plans.
Business owners should provide their employees with adequate information on how to utilize their HMO benefits effectively. This can include providing educational materials on preventive care, and showing how to select a primary care physician or how to access specialists when needed.
Some other tips for selecting the right HMO plan include:
- Ensuring the plan has the providers your employees need
- Double-checking the plan’s benefits and other costs
- Looking for plans that provide preventive care at no cost
- Assessing the plan’s customer service reputation and the their providers’ quality of care
Employee Education and Communication
Employee education and communication are some of the most important components of any successful healthcare plan for a small business.
This is because by providing your employees with adequate information on their healthcare services and costs, you enable them to make better-informed healthcare decisions.
For example, small business owners can drastically reduce expenses for the business and their employees by educating employees about preventive care, avoiding unnecessary procedures, and using in-network providers.
Educating employees is about more than holding workshops and providing educational materials. It’s also about providing effective communication and ensuring your employees are aware of their healthcare benefits.
This includes information on the various plans they have available to them, and the costs associated with each plan. Some ways business owners can communicate healthcare plan information is through newsletters, educational emails, or even one-on-one meetings.
Effective communication, in turn, encourages employees to make better-informed healthcare decisions, such as seeking preventive care and maintaining a healthy lifestyle.
Some tips on effective communication include:
- Using clear and concise language that’s easy to understand
- Using visual aids like charts and graphs
- Illustrating and drawing attention to key points
- Providing access to online resources and tools
- Encouraging open communication
Find the Best Healthcare for Your Small Business
Finding the best affordable healthcare for small business owners can be daunting. Fortunately, despite the time it takes, there are strategies and tips that can help reduce healthcare expenses while maintaining the quality of care.
- Explore cost-saving measures such as HSAs, wellness programs, and employee education and communication
- Understand the varying plan options such as high-deductibles, HMOs, and group health plans
- Maximize the benefits of high-deductible plans by negotiating costs, utilizing preventive care, using HSAs, and providing cost transparency
- Make the most of HMOs by selecting the right plan, educating employees on effectively using their benefits, and using in-network providers
- Provide effective healthcare benefit and cost communication
There is no shortage of challenges for small business owners, and providing affordable healthcare is no exception. However, by utilizing the tips and strategies outlined above, you can be sure that you’ll find the best healthcare plan for your business and employees.
Redirect Health’s Small Business plans offer affordable healthcare options for small business owners and plans that offer low out-of-pocket costs for employees.
The SMB plan also includes no-cost virtual primary care year-round and unlimited no-cost tele counseling to show employees that physical and mental health are both equally important aspects of their wellbeing.
With the right approach and right healthcare plan, small business owners can forget about rising healthcare costs and provide their employees excellent coverage with peace of mind.
External Content Sources: