The purpose of insurance is to mitigate the risk of an unlikely or costly event. In contrast, the health insurance industry has torpedoed the very purpose and benefit of insurance by exploiting the coverage of generally affordable, routine healthcare. A blueprint that has created a money-making monopoly for the insurance industry.
8 health insurance cost-cutting options for employers
The health insurance industry bakes in their fat profits along with the commissions and bonuses it gives brokers (and some PEOs) for every plan sold. These financial rewards get even bigger when supplemental plans are purchased. Yet, when 50 percent of the population consumes only 2 percent of healthcare dollars and a typical family plan costs a company about $12,000 to $24,000 per year, it’s clear that most employers are over-insured and overpay. Read more about why insurance coverage of routine healthcare is flawed.
Here are a few options for cutting the fat:
1. Medical Cost-Sharing Plans
Consider medical cost-sharing or healthcare sharing plans as alternatives to traditionally costly and rule-based health plans. Read more about medical cost-sharing plans.
2. Self-Funded & Level-Funded Plans
Consider a self-funded or level-funded plan. Here, an employer assumes the financial risk for providing employee health benefits. Both plans are similar. The level-funded plan is one where an employer pays a set amount of money into its own claims fund based on an estimate of what’s to be paid out. If there are savings, the employer shares in the unused funds as a credit on future contributions. Self-funded plans benefit employers by allowing them to;
- customize plans to cover only unlikely and costly medical events.
- eliminate unnecessary coverage of generally affordable office-based care.
- keep the interest garnered by health plan reserves until the funds are needed.
- pay only for services needed.
- possibly eliminate narrow provider networks.
Typically, employers purchase stop-loss insurance so that they are not crippled by unlikely and costly medical events. The downsides of a self-funded plan are financial and administrative costs and complying with federal laws. Some employers choose to administer these plans themselves while others choose a third-party administrator (TPA).
3. High-Deductible Plans
Consider high-deductible health plans (HDHPs) with maximum out-of-pocket costs according to the IRS rules. Because of high deductibles, employees cash pay for affordable routine care as needed. A platform like HEALTHdrum.com facilitates this process and allows employees to connect with providers for cost-transparent care. Consumers are more than capable of determining and controlling their routine healthcare needs. They’ve done that successfully for years in the cash pay arenas of cosmetic surgery, infertility and weight loss. In contrast, what confuses employers and consumers most are tricky health insurance contracts.
Even for non-HDHPs, choose plans with a big deductible to lower monthly premiums. However, the insurance industry has cleverly gamed the deductible business by capping deductibles and pricing mid-range deductible plans similar to that of high-deductible options. As well, to keep employers tied into covering routine healthcare they have done away with catastrophic care policies.
4.HRAs / HSAs / FSAs
Consider combining an HDP with one of the various types of HRAs (Health Reimbursement Arrangement), HSAs (Health Savings Account), or FSAs (Flexible Savings Account). Although developed on the pretext of benefiting employers and employees, these products have been cleverly designed to favor the insurance industry and government – like all health insurance plans. Marketed as additional benefits to traditional health plans they come with various potential upsides like covering deductibles and qualified medical expenses and delivering tax breaks. However, there are additional financial and administrative costs. There are two basic HRA options for employers; qualified small employers HRA (QSEHRA) for those with less than 50 full-time equivalent employees and who don’t offer group health benefits or, Individually covered HRA (ICHRA) where small organizations can reimburse employees tax-free for individual health insurance premiums. Only HSA accounts are owned by employees and remain with them at job change or retirement when they can use the remaining funds at their discretion.
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Contribution and Out-of-Pocket Limits for Health Savings Accounts (HSA) and High-Deductible Health Plans (HDHP) |
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| 2022 | 2021 | |
| HSA Contribution Limit (employer + employee) |
Self-only: $3,650 Family: $7,300 |
Self-only: $3,600 Family: $7,200 |
| HSA Catch-up Contributions (age 55 or older) | $1,000 | $1,000 |
| HDHP Minimum Deductibles |
Self-only: $1,400 Family: $2,800 |
Self-only: $1,400 Family: $2,800 |
| HDHP Maximum Out-of-Pocket Amounts (deductibles, co-payments and other amounts, but not premiums) |
Self-only: $7,050 Family: $14,100 |
Self-only: $7,000 Family: $14,000 |
| Source: IRS, Revenue Procedure 2021-25. | ||
5. Drop Supplemental / Vision / Dental
Consider dropping supplemental health plans such as dental, prescription, wellness, and others. Marketed as benefits for the employee, these products have also been cleverly designed to favor insurance industry control. One or more of these plans can always be reintroduced should workers be in short supply.
6. Online Pharmacies & Coupons
Choose health plans with affordable drug coverage. Many supermarkets have lists of free medicines that are available with a prescription. Also, there are online pharmaceutical warehouses as well as online platforms where consumers can download coupons to discount various medicines.
7. Independent Contractors & Outsourcing
Choose part-time staff, independent workers, or outsource work.
8. Encourage Wellness & Health
Surround yourself with employees that are motivated, have a strong work ethic, and make good lifestyle choices. Especially with a self or level-funded plan, since you will get a return for reducing health care costs.
Employers are handed health benefit costs
Employers are handed health benefit costs because vote-seeking lawmakers see business owners as easy targets. A scapegoat for a welfare system totally controlled and priced by the health insurance industry. A business largely responsible for the $3.9 trillion healthcare tab but without evidence for improvement in overall health. Worse still, the insurance industry and its middlemen continue to make record profits while U.S. healthcare ranks low, is highly inefficient and blisteringly wasteful. On the other hand, employers can count on annual cost increases to finance this licensed health benefit extortion. An unbridled shakedown since two-thirds of all the healthcare delivered is generally affordable office-based or outpatient care and doesn’t need to be controlled by the health insurance industry. Take charge. Cut overhead, cut insurance costs, and work directly with doctors. The health insurance industry can’t exist without employers or physicians.
For cost-transparent and affordable routine healthcare go to www.HEALTHdrum.com/
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