Obamacare lives. So what’s the best strategy now for controlling your company’s healthcare costs?
(This post originally appeared on The Washington Post)
The shouting is over and a vote wasn’t taken. The Republicans have retreated and the Affordable Care Act is still intact. President Trump has vowed that the legislation would ultimately implode and it’s likely that Congress will do little to stand in the way of that.
But that’s not your concern.
Your concern is controlling your healthcare costs now that we know that the ACA will be around for the foreseeable future. You know this is important because you understand that to attract good employees, and keep your existing people happy, you need to provide the best healthcare benefits that you can. Yet it’s very expensive–premiums for many individuals and businesses rose as much as 25 percent in 2017 and double digit increases are predicted for 2018 as well. So what can you do to control one of the biggest expenses your business incurs this year and next? Here are few things some of my clients are doing.
Most are sticking to high-deductible plans.
Whether you’re employing more than 50 full-time equivalent people and required to provide health insurance or you’re just looking to offer something, your choices aren’t many. The lowest-cost plans, called Bronze Plans, are by far the most popular. These plans have the highest deductible and out-of-pocket expenses. Most of my clients who provide these plans offer them along with more expensive Silver and Gold plans so employees have a choice. But those employers generally cover just the premium for the individual under the Bronze plan. It’s not great, it’s the minimum, but it’s the best cost option so far.
They’re coupling high-deductible plans with Health Savings Accounts.
Health Savings Accounts (HSAs) have grown enormously popular over the past few years, mainly because it’s a good way for employers – particularly those with Bronze plans – to help out employees by contributing pre-tax amounts that can be used to cover many healthcare expenses. HSAs are like retirement accounts–for healthcare. They’re subject to distribution rules and there are maximum contributions every year but the amounts can be invested and then rolled over to the new year. HSAs are simple and inexpensive to set up. The failed Republican plan would’ve allowed HSAs for individuals, not just companies and we may see that in some future legislation. In the meantime, if your company doesn’t have one you should get one.
They’re revisiting Healthcare Reimbursement Accounts.
At the end of 2016 Congress relaxed the rules on Healthcare Reimbursement Accounts, or HRAs. Before then, companies who reimbursed employees who sought to get healthcare on their own were subject to stiff penalties. Now it’s OK. Like an HSA, an HRA allows companies to contribute pre-tax money to a fund that an employee can use to purchase their own healthcare. The employee can also contribute. So if your plan isn’t sufficient, or you decide not to offer a plan at all, you can still offer a healthcare benefit by setting up an HRA and leaving the choice of healthcare up to the employee.
They’re going to Level Funded Plans.
A Level Funded (sometimes called Hybrid) healthcare plan allows an employer to combine both the benefits of self-insurance and group insurance. This plan is not for all. You need to have a relatively young workforce with good healthcare history, reliable data, and a strong administrator to oversee the accounting and management of the plan. If you’ve got all that then a Level Funded plan works like this: you tell your employees that you’ll cover the first $200-$300 of healthcare expenses before a traditional group plan kicks in. Because you’re taking responsibility for some of these costs you’ll typically find your group plan will be much more competitively priced.
Finally, they’re educating.
My best clients cough up a few hundred bucks each year and bring in an outsider – their benefits person, a healthcare expert – to talk about healthcare options with their employees. This stuff is complicated and let’s admit it – none of us understand it all. A commitment to education means more knowledge for your employees. The smarter your employees are about healthcare the better healthcare choices they’ll make…and that will benefit both you and them.
Was the Republicans’ failure a good or a bad thing? It really doesn’t matter. What matters is putting our politics aside and making smart decisions about our companies’ healthcare coverage. Our goal is to offer the best benefits we can while minimizing the impact to our bottom line. This is what my smartest clients are doing.