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SEBINS Blog: Manage Healthcare Costs
SEBINS Blog: Want to Manage Healthcare Costs?

The employer mandate is just around the corner again and it’s clear that you, as employers, will not pay the penalty.

Not only is the fine not tax deductible, but it also is not be available to the employee to help pay for costs should they go on the public exchange.

Employers are looking for strategies to lower costs and ultimately manage healthcare costs.

Below we have outlined the top utilized strategies impacting small to midsized employers. While they may not all be applicable to your workplace, our goal is to remind you that while in this unprecedented time of change with Healthcare Reform, there are ways to control costs while providing health coverage to employees:

 

1. Contribution setting for low-paid workers

Most employers, for low paid workers, will be setting defined contributions at the minimum of affordability level.

In order to mitigate participation, guidance towards Medicaid will be an important strategy.

Employees electing Medicaid will not be penalized for not having coverage and the employer also will not be receiving a penalty for those employees. In addition, in some circumstances, it is better coverage.

2. Managing Utilization

The Milliman Medical Index (MMI), which measures the total cost of healthcare for a typical family of four insured by an employer sponsored PPO plan, surpassed $20,000 for the first time in 2012. The MMI includes out-of-pocket costs such as copays and deductibles, as well as premiums paid jointly by the employer and by the employee via payroll deductions.

While a good portion of a family’s typical medical costs is devoted to necessary treatments, an excess of nearly 25% of total healthcare spending goes towards inefficiency and waste.

Employers have the opportunity within minimizing this inefficiency and waste while simultaneously improving quality.

When you understand proper utilization you can identify the waste and inefficiency in your own plan and begin to moderate the cost of health benefits by holding health plans and other vendors accountable for meeting reasonable utilization targets. This strategy is an alternative to other more commonly found “cost controlling” techniques; such as shifting costs to employees.

 

3. Revaluating Spousal Coverage

The mandate applies to employees and dependents; it does not apply to spouses. This means employers are going to be looking at either:

•          A spousal exclusion, which will entirely excludes the spouse from eligibility

•          OR A spousal surcharge, where an employer will charge extra to the employees who spouse has coverage available through their primary employer   

 

4. Reviewing Coverage for Part-Timers

Employers may take the opportunity to offer low cost plans to part timers which do not eliminate the possibility of the part-timer to get a subsidy on the exchange.

Employers still need to compete for labor on the job market and benefits will continue to be an important differentiator.     

 

5. Implementing Corporate Wellness

Wellness programs are designed to promote and deliver employees with greater tendencies to pursue preventive services (such as physicals, mammograms and cancer screenings) through self-care knowledge and incentives from the worksite wellness program.

Preventive care measures often cost employers more in the short term but can help to save longer-term health care costs.

Above all, developing a comprehensive strategy to not only manage healthcare costs but also remain compliant in the implementation of the ACA is imperative. 

 

View SEBINS Healthcare's Strategic Partners - leaders of corporate wellness and workers compensation programs

 

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