Small Businesses Turn to Multiple Strategies to Control Health Costs

Controlling costs is always a top priority for small businesses. In fact, 53 percent say it’s one of their top business objectives.² So when it comes to rising healthcare costs, it’s no surprise many are looking to rein in costs whenever possible. In 2015, 20 percent of small businesses expected to increase employees’ share of premiums, and 17 percent expected to increase employees’ copays.²

It’s important to note that shifting costs to employees can have an adverse effect. For example, employees at small businesses say if their employers shift an increasing portion of health insurance costs to them, it would have at least a moderate impact on their:²

• Likelihood to consider a lower-premium health plan – 73 percent.
• Overall level of financial anxiety – 72 percent.
• Job satisfaction – 71 percent.
• Likelihood to consider looking for a new job – 59 percent.

That’s why many employers are considering ways to save on healthcare costs, while still protecting their workforce. A few strategies include:

1. Account-based healthcare

High-deductible health plans tied to health savings accounts (HSAs) are growing in popularity. The number of people enrolled in HSA-eligible plans hit almost 17.4 million early this year, a nearly 12 percent increase since 2013.³

2. Changes in spouse coverage

Health care reform doesn’t require companies to extend coverage to spouses, and some companies are cutting back on spouse benefits, especially if the spouse can purchase healthcare through their own employer. A small percentage of small companies (6 percent) eliminated contributions to spouse or partner coverage in 2014, and 7 percent expected to do so in 2015.²

3. Outcomes-based healthcare

Companies are beginning to establish ways to keep providers and employees accountable for health outcomes. For providers, employers are looking to bundled pricing arrangements with doctors and hospitals that have proven track records for success. For employees, companies are using health screenings and incentives. In 2014, 1 in 10 small businesses introduced healthcare incentives, 11 percent expected to do so in 2015 and half (52 percent) of small businesses with wellness programs include a wellness screening component.²

4. Defined contribution benefits

Similar to an allowance for employees to spend on the healthcare they choose, defined contribution is a way for employers to control the amount they pay toward benefits. If the employee wants more robust coverage than their employer’s contribution can cover, the employee can choose to pay the remaining portion of the bill. While many details surrounding defined contribution still remain to be seen, the model is gaining consideration, especially as exchanges become more popular.

Bottom line: Strive for balance and effective benefits communication.

Even positive changes to a benefits program can be confusing to employees, but not all changes need to have a negative impact. In fact, 81 percent of employees at small businesses at least somewhat agree a well-communicated benefits program would make them less likely to leave their jobs.² To prepare for a smooth transition, communicate with employees frequently and develop a plan to touch base before, during and after a change takes place. Keep in mind the value your benefits bring to recruitment and retention, and discuss your options with a trusted benefits consultant who can help you establish a plan that works within your budget.

1 Accenture (2014). Three million U.S. employees enrolled in private health insurance exchanges in 2014 according to Accenture, accessed on Oct. 14, 2015, from https://newsroom.accenture.com/news/three-millionemployeesenrolled-in-private-health-insurance-exchanges-in-2014-according-to-accenture.htm.

2 The 2015 Aflac WorkForces Report, conducted on behalf of Aflac in January 2015 by Research Now, accessed Oct. 1, 2015, from https://workforces.aflac.com/2014-executive-summary.php.