By Martin Eising, HealthQuotes.ca Inc.
Toronto, ON (June 11, 2015) – Employee benefits are a great way to give valuable workers health, dental, prescription drug and vision care coverage. Most employees appreciate these benefits, and take them into account when considering either a new job or staying put at a current position.
But what options are available to businesses when the premiums reach a point where the company can no longer afford to pay for these benefits? Keep in mind that group health insurance plans are pro-rated, which means that premiums increase in direct proportion to the amount of claims that employees submit. The more claims that are paid out by the insurance company, the higher the premiums go up when it comes time to renew the health insurance plan.
So is there anything a company can do to reduce their group insurance costs? The answer to this is “yes!” Read on for several tips on reducing employee benefits costs.
Tip #1: Share the Premiums with Employees
Many employee benefit plans have the employer paying 100% of the premiums. This is ideal for the employees, while not so ideal for the company.
To cut down on costs a company can opt to have their employees pay a percentage of the premiums. This option may not sit well with all employees, but at the end of the day employees need to decide how much their benefits are worth to them. And the fact that the employer is picking up at least part of the tab means that employees are still getting a break with their health insurance costs.
Tip #2: Reduction of Coverage
Another way that companies can save money on their employee benefits is by reducing the amount of coverage offered by the plan. For example, dental and prescription drug benefits can be reduced from 100% coverage to 80% coverage.
Again, this is not ideal for the employees, but at the same time isn’t decent coverage better than no coverage at all?
Tip #3: Consider a Personal Group Insurance Plan
This method can save a company up to 50% on their benefits plan. Instead of having a standard employee benefits plan a company can optionally offer their employees a guaranteed issue personal health insurance plan instead.
Different plans (with different levels of coverage) could also be used for different classes of employees (e.g. floor workers compared to management).
These individual health insurance plans are guaranteed issue, and do not have any medical questions.
The trade-off is that these guaranteed personal health insurance plans do not offer as much coverage compared to traditional employee benefits. Which brings us back to the point that having some coverage is better than having no coverage at all!
Tip #4: Consider a Health Spending Account
A Healthcare Spending Account (referred to as an HSA or HCSA plan) is a different type of employee benefits plan. These plans do not reduce employee benefits premiums. Instead, they set a ceiling on how much money an employee can claim via their benefits.
Once these maximums have been reached coverage is terminated until the next fiscal year comes around, in which case the employee spend limit is reset.
This saves the company money at renewal time, since the premiums will not see massive increases due to a high amount of claims.
Similar to the personal group insurance option, employees can be classified and given a different spending limit, dependent on their valued worth with the company.
We hope you found these tips on how to save money on employee benefits plans useful.
If you have any questions please feel free to contact us; as licensed, experienced Canadian insurance brokers it is our mission to help!
HealthQuotes.ca has been helping Canadians get insured since 1981. They offer travel insurance and health insurance services online such as instant quotes and convenient plan comparisons.