Situation: A CEO has seen the expense of employee benefits, particularly the cost of health insurance, grow higher than the inflation rate in recent years. There are no indications that this will be reduced. Employees appreciate their benefits, and in the current environment the CEO is hesitant to reduce them. What alternatives are available? How do you control insurance expense?
Advice from the CEOs:
- To control rises in healthcare benefit costs, consider offering high deductible health insurance combined with company contributions to HSA Accounts. This combination can be less than current health coverage and may reduce the cost inflation of these benefits.
- Another alternative is to raise the deductible on medical insurance provided but cover the deductible differential for employees.
- Consider a benefits administrator to assist in putting together a benefits package to reduce costs. There are many alternatives available.
- Another big expense is Workers’ Comp (WC). The group shared strategies to control WC expense. Investigate those that apply to the company’s business model.
- Make sure that the company is coded in the proper category – if not the company may be paying a higher rate than required;
- Develop a proactive company safety policy, with documentation – this can gain discounts from some insurers;
- Industry or trade associations have developed ADR components for association members to help control costs;
- Investigate eliminating the medical coverage component on auto insurance for company cars that employees use to drive home. This may already be covered by WC;
- Shop insurance providers for WC coverage – some will quote more competitive rates to get the company’s business;
- Challenge the amount of WC reserves that are required for outstanding WC cases – the insurers may be assuming an excessive reserve to cover contingencies and charging the company for this excess;
- If the company’s insurer is maintaining an employee on the WC list pending resolution of the claim for an excessive period, push them to resolve the case quickly;
- Eliminate optional employees (e.g., officers) from WC coverage.
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