HOW CAN COST CONTAINMENT MAXIMIZE VALUE IN EMPLOYEE HEALTH BENEFITS

Incorporating cost containment measures into your employee benefits plan is crucial, with cost sustainability being the primary motivation. The management of costs plays a pivotal role in shaping the future of your employee health benefits program.

Navigating Rising Employee Health Plan Costs

Several factors contribute to rising plan costs, including the escalating expenses tied to prescription drug claims, particularly specialty drugs. Specialty drugs, designed for complex health conditions and often derived from living cells, are costly and cannot be replicated as generics, which can significantly impact plan rates. Traditional prescription drug claims with brand-name drugs and expensive dispensing fees also drive-up costs.

Another substantial driver of costs within employee health benefit plans stems from disability claims. Without proper management, a disability claim can persist far longer than necessary. Since disability claims entail payouts based on a percentage of an individual’s earnings for the duration of the claim, they can strain the financial resources of the benefit plan.

Finding Balance

Balancing the affordability of your employee benefit plan with adequate support for your employees is a critical challenge for employers. In an ideal world with limitless resources, cost containment and benefit decisions would not be a concern, and the focus would solely be on providing comprehensive support to employees.

However, maintaining the sustainability of your benefit plan necessitates cost containment efforts. If the benefit plan becomes unaffordable due to escalating rates, adjustments may be required, such as scaling back the plan or, in extreme cases, discontinuing it altogether, leaving employees without support and coverage. Such a scenario not only hampers employee productivity but also erodes morale, leading to negative sentiments towards your company and their job. Clearly, this outcome is detrimental to your business.

Attaining a Cost-Contained Strategy

Cost containment can be achieved while still supporting your employees through creative and innovative strategies, targeting cost drivers while enhancing employees’ health and well-being.

1. Prescription Drug Costs

Prescription drug coverage is a prominent and widely utilized employee benefit, but it harbors potential for waste. Cost containment involves eliminating unnecessary expenses while maintaining the same standard of care. Strategies include reducing waste linked to brand-name drugs, substantial markups, and high dispensing fees. For example, promoting the use of lower-cost or generic drugs through products like GroupHEALTH’s Smart Rx can ensure full coverage.

Employees opting for brand-name drugs when more cost-effective alternatives are available may receive reduced coverage. Some Smart Rx products centralize the dispensing of maintenance medications, cutting costs related to dispensing fees and markups, replacing them with competitive negotiated rates. Additionally, controlling specialty drug costs may involve requiring special authorization and limiting coverage amounts, maintaining support for employees while containing costs.

2. Disability Claim Costs

Disability claims represent a significant cost driver for benefit plans. Controlling these costs is achieved by incorporating professional disability management services alongside disability coverage. Disability management services, provided by third-party professionals like Disability Management Institute, assist both your organization and the ill or injured employee.

These services offer non-confidential updates to aid in labor planning during the absence and return-to-work process. They also guide employees through paperwork, accessing services, and creating personalized return-to-work plans. By facilitating the employee’s return to work sooner, these services minimize claim costs directly impacted by claim duration.

3. Mental Health Costs

Employee mental health can profoundly affect various aspects of your business, from absenteeism to increased prescription drug claims, reduced productivity, and presenteeism. To control costs associated with mental health, proactive measures are essential. Offer access to an Employee and Family Assistance Program (EFAP) to provide confidential, short-term counseling and additional resources like articles, tools, and podcasts.

The EFAP is accessible 24/7, addressing mental health concerns related to finances, family matters, anxiety, and more. Supporting employees in this manner not only controls costs but also ensures they seek assistance before their mental health deteriorates, benefiting prescription drug costs, disability claim costs, and overall employee morale.

It’s important to note that many cost control mechanisms also benefit employees. For instance, central dispensing pharmacies provide the convenience of home-delivered prescription drugs. Disability management services contribute to employee well-being by expediting their return to work, with statistics demonstrating that earlier return improves post-disability health. Cost containment, therefore, doesn’t necessarily mean reducing support for employees; instead, it can result in improved coverage and well-being.

Good advice is key

Is your employee benefits plan optimized to improve well-being of your employees? Do you have disability management professionals and counselling support readily available to support your employees? Explore your options with one of our licensed advisors on the phone, or contact us for a comparison quote.

Whether you’re looking for extended health and dental coverage, disability coverage, or life and critical illness coverage, GroupHEALTH has affordable benefit packages that work as hard as you do.