An annual review of benefits each year might be able to save a practice a lot of money, experts say.
Offering benefits to employees is a necessary part of staying competitive and encouraging employee retention. A 2017 report on employee benefits by the Society for Human Resources Management (SHRM) found that the number two reason employees leave a workplace after seeking better pay, is for better benefits.
Additionally, the individual market for health insurance since the passage of the Affordable Care Act has become “a field of land mines,” says Adam Hyers, owner and president of Hyers and Associates, Inc., a Columbus, Ohio-based independent insurance agency that works with numerous healthcare providers across the country. “It’s a fool’s errand to send your employees out on the individual market where the networks are very restrictive and the costs are very high.”
However, every practice has to find the right balance of offered benefits to keep a healthy margin. The 2017 Kaiser Family Foundation Employer Health Benefits Survey showed that on average, organizations offering health benefits paid as much as $5,900 per year per individual covered, and $13,400 for family coverage. These costs add up in practices with numerous employees.
Experts suggest practices review their benefits annually and survey employees before making any major changes to benefits, but to also be proactive in seeking opportunities for cost savings.
Cost saving options
In the current health insurance landscape, in which the Trump administration has been seeking legal workarounds to the Affordable Care Act in lieu of a failed repeal, it may be especially useful to review benefits more than once a year, says Arthur Tacchino, JD, chief innovation officer at Sync Stream Solutions, a New Orleans, La.-based consulting firm that helps employers understand and manage health benefits.
“Things are always changing, so re-evaluating benefits is a really good idea because a better option might have come along or have been created that [employers] might not be aware of,” he says
However, physicians and practice administrators need to be aware that some new options may not be as good as advertised. One such area, billed as cheaper for employers and individuals, are short-term or “mini” medical plans, which might only cover an individual for three months to 12 months, Tacchino explains.
Jonathan Gruber, PhD, professor of economics at MIT, in Cambridge, Mass., who has expertise in employee benefits, calls these plans “terrible.
“They’re not real insurance,” he warns. “Some people are going to be fooled into thinking they have insurance when they don’t, and it will pull healthy people out of the pool and raise the premiums for everyone else.”
Additionally, while not new, multiple employer welfare arrangements, which allow smaller practices to band together and buy health insurance as a larger group, are becoming more popular in the face of the high cost of steeper health insurance costs, according to Ty Reid, director of worksite benefits with the O’Neill Group, an insurance broker of employee benefits, in Wadsworth, Ohio.
“Smaller practices are starting to contract healthcare in the way much larger organizations do through risk sharing agreements,” Reid explains.
Gruber feels the most effective way that physicians can save money is to be “more aggressive in shopping across insurers.” He sees employers saving a lot of money by narrowing the networks of the plans they offer to their employees. “Employers don’t need to cut benefits, just cut out high priced providers that aren’t much better than any other providers,” he says.
He says it’s common for physicians to see a name they’re familiar with, such as Blue Cross, and sign up purely because of the name recognition, “but they don’t shop around or realize there are better options out there. It’s worth a day and a half to sit down and shop the options,” he insists.
Forecast your financial costs
Whether a practice is engaging in an annual review of benefits, or financial concerns drive a need for a change, practices should attempt to forecast the costs of offering different levels of benefits packages, either through available tools, such as online analysis toolkits or with the help of a financial advisor who can run the numbers under multiple scenarios.
Forecasting costs help a practice come up with benefits options, such as tiers of coverage based on employee classifications, says Tacchino. The higher the tier, the more expensive the premium is likely to be, for the employee, but there may be fewer out-of-pocket expenses.
Another area of cost savings could come from changing the percentage the employer pays for the plan. If a practice is already paying 80 percent of benefits, dropping that contribution to 60 percent, for example, could result in significant savings, Tacchino recommends.
Of course, this must be done with a clear understanding of the legal and regulatory considerations about how much an employee is allowed to pay for the benefits a practice offers. “If the plan you’re offering is not affordable, you may be subject to penalties under the law,” Tacchino says. And it could also affect morale among practice employees.
He strongly recommends having a financial advisor or human resources expert who understands the legal particulars about employee benefits weigh in as providers make decisions about changing benefits.
Additionally, Hyers recommends keeping an eye on employees who might be eligible for Medicare in the near future.
“Even if they’re not retiring, you want them to be investigating their Medicare options, with or without a broker,” he says. “A lot of people can mess up their Medicare enrollment by not understanding the deadlines and rules.”
Educate employees about their benefits
Reid says it’s also important for practices to keep in mind that the average employee’s literacy about their own benefits tends to be low.
“Medical practices are focusing on the employee experience. Rather than potentially adding or dropping certain benefits, the focus has shifted to improving the way they are communicated,” he explains.
Practices are turning to concierge services, coaching, and decision-making support tools such as apps for smartphones or tablets, such as PolicyGenius, which helps consumers understand the ins and outs of health insurance, defines terms, and the details of their specific plans to help employees find the best and most efficient ways to receive care.
“After all, benefits are only as valuable as what you get out of them,” Reid says. “So it’s becoming less about which benefits to offer, and more about using the ones they have more effectively.”
Engage a survey
Many practices opt to survey their employees to make sure that the benefits are covering the things that employees actually want, according to Hyers.
“Sometimes you can get pretty good tips as to what’s bothering people, he says. “There’s competition out there for employees and you’ll see a lot of people leave groups out of frustration from poor benefits.”
However, he cautions that survey questions must be carefully crafted so as not to get employees’ hopes up for benefits a practice does not intend to offer.
The SHRM employee benefits report echoes this, stating, “Be mindful that conducting a survey will set up employee expectations that benefits may change or be improved. Therefore an organization should have a clear purpose and a plan of action based on the survey results.”
And when rolling out new benefits packages, Joe Weinlick, chief marketing officer of Nexxt, a workforce recruiting company, encourages providers to be as transparent as possible about reasons for the change. “With premiums rising in recent years it’s very hard to convey to employees that the reason they may have to pay more, or that benefits are getting worse, is external to the company,” Weinlick says.
If a practice has done its homework, surveying employees and forecasting costs, picked a new set of benefits to unroll, Weinlick urges thoughtfulness in laying this out for employees. Changes to benefits can be stressful and often require provider changes.
Just rolling out changes, particularly if costs are going up for employees, without much warning, “leaves a bad taste in employees’ mouths,” Weinlick says.
Offer other kinds of benefits
Weinlick says results of a 2018 internal survey from Nexxt’s database of 2,403 employees in the healthcare industry the survey revealed that “medical and dental was critical,” followed by vision.
Retirement plans are often popular, Weinlick says, but not always an option for employers−due to costs−so he sees employers offering professional and career development resources, as well as “wellness benefits,” in the form of resources and information. The SHRM employee benefits report shows that employers were most likely to have increased wellness benefits over any others in 2016, as a way of making up for gaps in medical, dental, and vision benefits.
The number one benefit after medical coverage that employees want is schedule flexibility, Weinlick shares. This may be a way to keep employees happy without offering too wide a panel of benefits. “People want the ability to be able to fit their private life into their work life,” he says, to take time off for family time and even their own medical appointments.
This could come in the form of vacation days off, or other forms of paid time off, as well as allowing an employee to work part-time hours. He’s even heard of companies that offer loan reimbursement programs for employees with student loans, as an incentive for younger employees who might not need as comprehensive health benefits, or for older employees who are trying to increase their education.
In trying to strike the right balance between retaining employees and keeping a happy bottom line, the expert consensus is to review benefits annually with an open mind toward change.
“A once a year review of benefits can save you a lot of money,” Gruber says.