By: Cindy Najera on June 28th, 2024

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5 Strategies for Managing Rising Healthcare Costs in 2024


Health benefits are one of the most sensitive parts of the employer-employee relationship. A great health plan gives people a sense of safety, and often includes their closest loved ones. Whenever there’s a major change, employees’ first thoughts are often, “What will happen to my health benefits?”

Health-related benefits are expensive to provide—and they’re only getting more expensive. Leaders often find themselves in a difficult situation, trying to manage costs while also protecting a positive employee experience. A recent report by Aon identified “managing healthcare costs” as the top priority for employers in 2024. It’s easy to see why, as costs are expected to increase by 6.5% this year.

Why are health benefits getting more expensive?

The cost of basic health benefits have increased in a steady pattern over the years. The average premium for a single employee with no dependents went up by 50% between 2010 and 2022; the national average wage increased by roughly the same amount.

However, there are some other factors that can change the amount your business spends on health-related benefits. These factors include:

  • More high-cost claims: The number of people requiring high-value treatments is on the rise. One insurer, Sun Life, reports that the number of claims above $1 million has increased by 50% since 2019. These high-cost claims can lead to higher premiums, and additional bills that employers and employees may need to pay out-of-pocket.
  • Cost of living issues: Many employees have felt the squeeze of inflation and the cost of living crisis. As a result, some people have been forced to skip checkups, health screenings, and other measures that can help prevent chronic illness. That’s bad for individuals—and it puts pressure on health benefits.
  • New treatments: Young people are seeing record rates of cancer, but new forms of gene therapy offer hope. Meanwhile, popular new drugs like Ozempic offer a solution for both diabetes and weight loss. Unfortunately, new drugs and treatments tend to be more expensive than other options.
On top of this, your company may have other issues, such as being with the wrong benefits provider or having benefit options that don’t suit your team.

5 tips for tackling rising health benefit costs

Some of the issues listed above are quite sensitive, and immediately raise questions about ADA, HIPPA and employee privacy. That’s why it’s always important to work with experienced HR experts before making changes to your health benefit strategy.

The good news is that you can take active steps to help your employees be healthier and happier, without compromising the quality of health benefits offered or intruding on their privacy. Here are a few ideas to get started:
Create a healthy work environment
Stress is one of the biggest risks to our health, and work is the most common source of stress. In the United States, 39% of people say that their biggest stressor is an unmanageable workload. Reducing workloads, improving manager communications, and offering more support could help improve your team’s overall wellbeing.

It’s also important to consider other factors, like the current state of your organizational culture. Remember that DEI initiatives can also help reduce stress, especially for employees from marginalized groups. Remote working and flexible hours can also help promote employee wellbeing.
Get employee feedback on benefits
Are your benefits meeting employee needs? The best way to find out is to ask them. Use pulse surveys to find out if they’re happy with current benefits, and get an idea of which benefits they would like to see. You can also review enrollment data to measure benefit uptake.

Ideally, employees would like a flexible menu of benefits from which to choose. Remember, employee needs do evolve over time. For example, a recent graduate might want fitness benefits like gym membership. After a few years, they might be more interested in fertility benefits or maternity support.
Deliver high-tech alternatives
Telemedicine has been a major breakthrough, and is a great way to reduce healthcare costs. Virtual consultations are generally cheaper, plus they’re more accessible for employees, who don’t need to travel or take time off work.

Digital sessions are also a great way to deliver mental health support. Online therapists and mindfulness apps are a flexible way for people to help manage stress and their general well-being. Some health providers may also offer other digital tools to help with fitness and nutrition.
Offer screening and prevention programs
Early detection can make a huge difference to health outcomes. If you can provide things like cancer screenings and heart health checkups, you may reduce the risk of high-cost claims (while also looking out for your team’s wellbeing!) Many heath benefit providers are also keen to provide such screenings, so speak to them and find out what they have to offer.

Preventative support can also make a big long-term difference. For instance, a program on managing workplace stress could help people identify problems and take action before it becomes a major issue.
Actively promote health benefits and perks

Employees often don’t even realize what benefits are included in their package. It’s a good idea to work with your HR team to promote these benefits internally. Be sure not to overwhelm people with information though. Instead, focus on one or two benefits at a time, such as telemedicine consultations or access to cancer screenings.

If your team uses Health Savings Accounts or Flexible Spending Accounts, offer advice on ways to maximize these benefits. For example, at the end of each year, you could clarify exactly how 
the annual rollover works and what it means for them. You could also provide a suggested list of allowable expenses (like stocking up your home medicine cabinet) to help them spend any remaining balances.

In summary, addressing the challenge of increasing healthcare costs demands a strategic approach encompassing careful planning, fiscally responsible healthcare choices, proactive communications, and employee wellness initiatives. An HR consulting firm can provide specialized guidance on personalized benefits plans and innovative strategies for cost reduction that are specific to the needs of your organization. Contact us today to discover how we can assist you in managing healthcare expenses and fostering a happier and healthier workforce.

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