Health Insurance Trends, Challenges & Solutions for Open Enrollment in 2023
As open enrollment season approaches, both employers and employees will need to prepare themselves for a tumultuous healthcare landscape that continues to impact already-tight budgets.
However, even though premiums are on the rise, healthcare services that go beyond the basics remain essential for keeping employees productive and satisfied.
Amid provider shortages, economic uncertainties and other challenges, businesses may have to think outside of the box this year to save money without skimping on the quality or scope of their offerings.
Let’s explore the current state of health insurance in the U.S., then delve into solutions for identifying spending gaps to help stretch your healthcare dollar to the most highly utilized, in-demand benefits.
The Dilemma: Paying Higher Premiums for the Same (or Fewer) Services
SHRM predicts employer premium costs will rise nearly 6% in 2023, compounding the already above-average 4.4% rate increase from 2021 to 2022. This is largely due to year-over-year inflation averaging 8.5%, and an astounding one in five healthcare workers leaving their positions during the pandemic.
Although premiums and copays for employees have been mostly unaffected, rising just 0.6% since last year, workers are still struggling with other disproportionally high expenses for rent, groceries, gas and more.
Unless they have a solid benefits package in place, many of their health concerns may be placed on the back burner — which, for businesses, could lead to long-term complications that increase absenteeism and presenteeism.
Meanwhile, employee demand for more robust benefits is rising in tandem with premium costs. Nearly 70% of U.S. workers believe employers have a responsibility to support the health and well-being of their employees, according to MetLife.
Glassdoor also found that 80% would rather have better benefits than a pay raise.
This puts businesses in a sticky situation. Do they cut back on healthcare spending and risk tanking employee satisfaction and retention in a competitive labor market? Or do they enhance their plan to meet employee needs but risk significant impacts to the bottom line?
Strategic employers can leverage these solutions to help make the right benefits investments to keep companywide morale, productivity and utilization high.
Consider Moving to a Self-Insured Model to Gain Access to Claims Data
Traditionally insured businesses have little control over their healthcare spending and continue to pay higher rates year after year, even if utilization and offerings are stagnant.
Self-insured businesses, on the other hand, have the unique privilege of finding gaps in their benefits packages through claims data. This set of insights outlines the who, what, where and why behind their healthcare spending and enables them to pinpoint any unnecessary expenses.
Around 75% of all large organizations in the U.S. are self-insured, according to Employee Benefit Research Institute.
While self-insured models aren’t for every business, they can serve as a strategic workaround for combating rising premiums.
By providing a clear solution for identifying wasted healthcare dollars, employers can re-prioritize their funds to support only the most-utilized benefits.
For example, healthcare companies often charge patients for the predicted set of services required to treat a certain condition — rather than the individual services the patient actually received.
Employers can educate employees on requesting fee-for-service charges (similar to a line-item receipt) instead of grouping all the services into one large, oversimplified bill.
Additionally, if you notice employees have been visiting the ER or hospital for problems that could easily be treated through primary or urgent care, you may consider working disincentives into the plan, like higher copays for unnecessary, expensive emergency treatment.
Employers can then use this dataset to find extra room in their health plans for the following benefits, which will help them stand out from the competition when attracting and retaining talent.
Even if a self-insured model isn’t realistic for your company, these add-ons are more than just trends — they have all proven to bring a significant return on investment while supporting the long-term health outcomes of your workforce.
Mental Health Benefits
COVID-19 removed much of the stigma around seeking mental health treatment, which may explain why utilization rates today are more than 3 times higher than they were in 2019, according to McKinsey & Co.
With anxiety, depression and other conditions now more normalized, the one in five Americans who suffer from behavioral issues are demanding comprehensive mental healthcare as a standard part of their benefits packages.
In fact, data from Benefit News shows that while 96% of U.S. employers feel that they are making significant effort to aid their employees’ mental well-being, only 69% of employees feel the same.
Not only does offering comprehensive mental health treatment help businesses save thousands of dollars in lost productivity each year while boosting companywide morale and motivation, but the National Safety Council reports it also brings a return of $4 for every dollar invested.
Telehealth and Virtual Care
With equal satisfaction rates and health outcomes to in-person care, telehealth is another trending benefit brought into the mainstream by the pandemic — and as a newly preferred method for care, it isn’t going away any time soon.
Telehealth has helped eliminate many longtime barriers to healthcare, like cost, accessibility and convenience, which previously deterred employees from seeking treatment before their conditions turned into costly, long-term complications.
The setup is simple: Employees can speak with a provider from the comfort of home during extended hours via their phone, tablet or computer. There’s no need for long commutes, waiting rooms or leaving work early to make it to a brick-and-mortar office during business hours.
Plus, fewer hospital resources and less time commitment means lower premiums and copays for all parties involved.
What started out as virtual urgent care has since evolved to reach nearly every aspect of the healthcare spectrum, from primary care to behavioral health and beyond. Its full potential is still far from being realized, so businesses that implement this benefit will be ahead of the curve in their offerings.
HRA, HSA and FSA
Healthcare Spending Accounts (HSA), Healthcare Reimbursement Accounts (HRA) and Flexible Spending Accounts (FSA) are directed spend healthcare accounts that have advantages for employers and employees alike. Additionally, the money used in these accounts is often tax exempt or tax deductible.
More than 56% of all employers now offer either HSA, HRA or FSA, according to SHRM, and this number has grown 12% over the last eight years. Understanding key differences among each type of account can help you identify which one(s) would make the most sense for your business.
• HSAs are like a retirement account specifically for medical expenses. Employees own the account, while employers enjoy tax savings and minimal hands-on management.
• HRAs are special funds that pay for medical expenses employees’ health insurance plans don’t cover, like deductibles.
• FSAs help employees pay for qualified health expenses, childcare and elder care through non-deductible savings accounts.
Concierge services are an innovative and creative solution that can set your company apart from other employers. Beyond negotiating lower premiums, the concierge navigates employees through the complex healthcare maze to help them find the right services for their unique needs.
In turn, a well-educated workforce that knows how to make the most of their benefits helps employers save money by increasing utilization and engagement.
It may not be easy to find cost-effective benefits that boost employee satisfaction in today’s healthcare climate, but it’s certainly possible with the right strategies in mind. If you need additional guidance in building a highly utilized benefits package, the experts at Lovitt & Touché are here to help. Learn more about our full suite of employee benefits solutions.