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Refreshing Insights

Annual premiums for employer sponsored family health coverage reached $20,576 in 2019, up 5 percent from 2018, according to the Kaiser Family Foundation (KFF) annual employer health benefits survey. Workers on average paid $6,015 toward the cost of single coverage with an annual deductible of $1,655.

Companies with more than 50 employees are required by law to make health coverage available to employees. Smaller employers don't have the same obligation, but 56 percent of small employers choose to offer health benefits to at least some of their workers, the survey shows.

Offering a competitive benefits package is considered part of a successful strategy for recruiting and retaining talented employees, and every company that offers health benefits is looking for ways to combat the rising costs of healthcare and insurance premiums.

One of the many ways to help keep costs in check is to streamline the administration process for healthcare benefits. From open enrollment to employee training, following these best practices will help you offer lower premiums for high-quality care.

Document Everything

If you offer health benefits, you need to prove you offered them to all eligible employees. Most employers have eligibility enrollment periods (e.g., a new employee qualifies for benefits after 30 days) for employer sponsored health plans. Make sure employees sign documentation by the enrollment deadline that indicates whether they accept the coverage or waive it.

Some companies have had employees say they didn’t need insurance when they were first hired, but then six months later they changed their minds. Without signed documentation of waived coverage, the Department of Labor (DOL) could get involved and demand your company accommodate employees’ demands.

Additional documentation is also required when premiums are deducted from an employee’s paycheck. Section 125 of the IRS code indicates that employees must sign a salary reduction agreement.

Create a Consistent Administrative Process

Establish and document the steps in a repeatable process for completing benefits paperwork required for various scenarios (e.g., how new enrollees are handled versus renewals). Determine timeframes required for processing, deadlines for submitting paperwork, etc. Also establish who is responsible for each step in the process.

Many human resources departments use software to send employee alerts regarding notices, deadlines and other updates to help everyone stay on top of responsibilities. It’s also helpful to include benefits forms and explanations on a company intranet that employees can access on demand.

Consistency is key when managing health benefits and creating organizational efficiencies. Some companies try to skirt around established timeframes because they’re eager to bring on a new hire who wants to get benefits immediately instead of waiting for the enrollment period. Every employee needs to abide by the same rules. If another employee had to pay for COBRA when he or she first came on board and discovers that a new hire didn’t, it could mean trouble.

Communicate Changes and Annual Notices

It’s not unusual for companies to change plan designs to mitigate escalating costs. It’s important to not only notify employees, but also to communicate why the changes occurred and put them in as positive a light as possible. Accentuate the benefits of the plan and put any changes in perspective. It may help to disclose the total premium to show employees what they’re paying versus what you as the employer pay.

You’ll also want to communicate annual notices and rights associated with health benefits. Some examples include the Children’s Health Insurance Program (CHIP), special enrollment rights for newly married spouses or adoptive children, Michelle’s Law, COBRA rights notifications and many others.

Help Employees Take Ownership

Some workers believe it’s the employer’s job to keep premiums as low as possible. While selecting the right coverage, carrier and broker certainly are major factors, the greatest impact comes when all employees take personal responsibility to reduce costs.

It’s imperative to teach employees they have choices, and that making the right ones could lower their premiums over time. Many carriers now have a hotline service that employees can call to speak with a real doctor or nurse who will evaluate a non-life-threatening condition over the phone or via FaceTime and issue a prescription without the patient ever having to step foot inside a hospital, clinic or, worse yet, the emergency room.

Additionally, a hospital might order an MRI for a non-life-threatening issue yet shopping around to get that procedure from a different provider could cut the claim costs in half. Teaching employees how to get the right care at the right time at the right price could significantly reduce claims and, consequently, premiums.

Looking for more tips?

At McClone, we work with employers and employees to ensure everyone takes advantage of opportunities to lower rising premiums. Check out our complimentary guide 6 Tips for Controlling Rising Healthcare Costs and contact us so we can help you align your benefits with your organization’s business goals and initiatives.

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A collection of articles from the McClone team with the helpful knowledge and insights to ensure your organization is well protected.