Balancing Health Care Costs And Employee Benefits: 5 Best Practices

Insights from industry leaders

Balancing healthcare costs and competitive employee benefits is a challenge for many human resources (HR) and benefits leaders. To help you navigate this, we've gathered five insightful tips from founders and Chief Financial Officers. From partnering for employee-directed spending to shifting to a quality-focused plan design, discover how these leaders optimize cost-effectiveness while meeting the needs of their workforce.
 

• Partner for Employee-Directed Spending
• Leverage Long-Term Healthcare Partnerships
• Embrace Creative Benefits Solutions
• Maximize Flexibility in Health Budgets
• Shift to a Quality-Focused Plan Design

Partnering for Employee-Directed Spending

We found a way to be generous, but be generous in a very calculated, plannable way. We partnered with a company called Gravie.com, which allowed us to decide how much to spend on each employee. Then, the employee decides how to spend those dollars. Gravie took the headache and logistics off of our plate so that HR could focus on higher-leverage things like recruiting and retention.

Casey Allen, Founder, Headcount

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Leverage Long-Term Healthcare Partnerships

Leveraging long-standing partnerships is beneficial. Over the decades, relationships with healthcare companies have been built that have provided significant discounts. This approach ensures the team receives top-tier healthcare while remaining fiscally responsible.

If a long-term partnership with a healthcare company has been established, it should be leveraged to negotiate better terms and discounts. If there hasn't been a long-term partnership with a healthcare company, building relationships and exploring various options to ensure optimal terms in future collaborations is recommended.

In a rapidly changing healthcare landscape, these solid partnerships prove invaluable, allowing the workforce's needs to be met efficiently. Fostering and maintaining such strategic relationships is essential for any HR leader aiming to provide both quality and cost-effective benefits.

Fred Winchar, Founder, Certified HR Professional, MaxCash

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Embrace Creative Benefits Solutions

There are so many creative benefits solutions for small businesses and startups! These include federal and state tax credits for offering 401(k) and other benefits, as well as smartly designed health plans that include only the provisions needed for each individual employee and their dependents.

By further making benefits flexible with HRA, HSA, and/or FSA options, employees can contribute or get reimbursed for the benefits that matter most to them, like mental health support and childcare.

Susan Snipes, Owner and Principal Consultant, Employ HR Pro, LLC

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Maximize Flexibility in Health Budgets

The best way to approach health budgets is to provide as much flexibility as possible. With flexible budgets, you eliminate the costly waste of providing blanket services to employees who might only use one or two perks without touching the rest. Trying to make everyone happy with the same benefits package is an impossible game to win—you either end up overspending to offer more options or over-providing benefits that half your team doesn’t really need.

Flexible services allow you to give your team ample benefit budgets and the freedom to choose how their money gets funneled through each service. If you offer $20K in more stringent health benefits, but a particular employee can only make use of $5K, neither the employee nor management will be totally satisfied with the program. But if you give every teammate a $20K pot to use as they need on healthcare, you’ll maximize satisfaction while minimizing waste!

Gillian Dewar, Chief Financial Officer, Crediful

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Shift to Quality-Focused Plan Design

When we first started working with a PEO, our strategy was maximum optionality. This was great for learning the needs of our employees, but it came with a higher cost. In the last year, we have moved to a plan design that emphasizes quality but has fewer choices. Not only has this lowered the cost for the company, but most employees are less overwhelmed when open enrollment comes around.

Trevor Ewen, COO, QBench