6 Tips to Control Small Business Health Insurance Costs

Employers nationwide are feeling the pinch of rising health insurance costs. This challenge is particularly pronounced in Nevada, where health insurance premiums rank #15 for the most expensive premiums in the country. 

Although the upfront expense of health insurance might make some employers hesitant, it’s essential to recognize the numerous advantages that offering health benefits brings to the table for both your team and your bottom line. 

In this blog post, we’ll delve into the current market and workforce trends that impact the increasing healthcare costs and the enduring recruitment and retention challenges faced by businesses in Nevada. We’ll also explore strategies for employers to optimize their healthcare offerings, addressing these critical concerns.

What is causing Healthcare Expenses to Rise for Nevada Employers

Over the last decade, employers in Nevada have been grappling with the increasing financial burden of healthcare costs. According to a study by the Kaiser Family Foundation in 2022, employer premiums for employee health plans have surged by over $225 annually for single coverage and $700 per year for family coverage. These rising premiums have exceeded inflation rates and wage growth, presenting significant challenges for businesses and their employees.

On average, employers pay $6,584 per employee for single coverage and $16,357 for annual family coverage. A recent report from Aflac’s 2023 Workplace Benefits Report indicates a significant increase in benefits costs, with 72% of employers reporting escalating expenses over the past year—a marked increase from 2021. This surge in costs can be attributed to various factors, including the rising prices of prescription drugs, heightened utilization of medical care due to postponed healthcare needs during the COVID-19 pandemic (referred to as the ‘COVID-19 hangover’), and a notable uptick in mental health issues and chronic illnesses. These trends have resulted in deteriorating health conditions and higher utilization rates, ultimately impacting healthcare expenses. Unfortunately, experts anticipate that faster cost growth will continue in 2024 and beyond, as employers have yet to experience the full impact of inflation-driven cost increases.

Read more about why Nevada’s health insurance costs are rising for employers in 2024.

Navigating the Talent Tug-of-War: Healthcare Benefits as the Competitive Edge

In today’s dynamic job market, the quest to attract and keep top-tier talent has become a rollercoaster ride. The competition for skilled professionals has intensified, and the expectations of potential hires have evolved. It’s not just about the salary anymore but the entire package. Aflac’s 2023 Workforce report revealed that 58% of surveyed employers expressed concerns about employees accepting job offers with lower pay but more comprehensive benefits—a significant increase from 31% in 2019. Offering healthcare benefits can be a game-changer in this talent tug-of-war, so many companies are choosing to enhance their health insurance plans instead of resorting to cost-cutting measures. In fact, despite rising costs, 88% of companies in Nevada offer health insurance to workers.

Healthcare benefits offer a sense of security and peace of mind, a safety net that resonates deeply with job seekers. It’s a tangible way to show you care about their welfare and can tip the scales in your favor when they’re weighing their options. Plus, a healthy workforce is happy and productive, which benefits your employees and your business.

Maximizing Your Healthcare Benefits

In the ever-evolving world of work, it’s crucial to offer healthcare packages that cater to your team’s well-being and boost your company’s bottom line. Whether your priority is attracting and retaining top-notch talent or managing labor costs, a range of strategies and tailored approaches can help you move closer to your objectives.

As you gear up for your healthcare open enrollment period, take a closer look at these strategies, which are especially important for small business owners in Nevada.

1. Personalize Benefits for Specific Employee Groups

By introducing distinct benefit tiers with flexible cost-sharing options, you can manage healthcare expenses while tailoring your recruitment and retention efforts to specific employee segments. For instance, you might add benefits for employees with longer tenure while adjusting them for new hires. Alternatively, you could customize benefits based on job roles, providing varying coverage levels for managers or supervisors compared to frontline staff. Establishing these differentiations on legitimate employment classifications rather than discriminatory criteria is imperative. When crafting tailored benefits, take into account factors like:

  • Job titles
  • Tenure within the company
  • Full-time or part-time status
  • The location of employees (in-state or out-of-state). 

This approach ensures a fair and strategic allocation of benefits across your workforce.

2. Review Health Insurance Contributions

Regularly reviewing the contributions made by both employers and employees towards health insurance is like tuning up your car for peak performance. It’s a vital practice to ensure everyone gets the most out of the arrangement. For employers, this means striking a balance between offering competitive benefits that attract and retain talent while managing costs effectively. 

When figuring out your share of the cost of your employee’s health insurance premiums, keeping the Affordable Care Act (ACA) in mind is essential. The ACA has set clear standards for affordability. According to the law, for health coverage to be considered “affordable,” the lowest-priced individual plan provided by the employer should account for “9.78 percent or less of the employee’s household income.” It’s worth noting that this calculation doesn’t just consider the employee’s income but the combined income of everyone contributing to the household. So, it’s a broader perspective that ensures health coverage remains within reach for everyone in the family.

Your employer-sponsored plan qualifies as meeting the minimum value standard when it fulfills the following criteria:

• Covers a minimum of 60% of the overall healthcare service costs

• Offers substantial coverage for physician and inpatient hospital services.

For instance, for employer-provided coverage in Nevada, on average, employers contribute $4,835 for single coverage, and 75% of Single Coverage Premiums are paid for. 

3. Gather Employee Feedback and Demographics

Understanding and addressing employee needs is a cornerstone of a successful business. When evaluating your employer-sponsored healthcare benefits package, this principle holds more truth than ever for small businesses with limited budgets.

When reviewing your offerings, conduct an employee benefits survey first to see if the current package is really what they want and need. The feedback will help you gain insight into how to make the most of your benefits budget. It’s a smart way to ensure you’re spending your budget on benefits your employees will use.

Gaining insights through basic demo questions can unveil which employers are making the most of your current benefits. It will also pinpoint employee segments requiring additional or entirely different benefits to enhance their satisfaction. For example, if you have many employees with families, ensure your offering supports their needs. 

4. Empower Your Employees Through Education

Educating employees about their healthcare plans is like giving them a roadmap to better health and financial security. Providing clear and comprehensive information empowers your team to make informed decisions about their well-being. It helps them navigate the intricacies of their plans and encourages them to take full advantage of the available benefits. Moreover, when employees understand their coverage, they are more likely to utilize preventive care, ultimately reducing healthcare costs for both them and the company. 

Consider providing educational support during open enrollment and periodically throughout the year. Offering access to benefit consultants can help employees better understand their options. You can even go the extra mile by implementing workplace policies allowing employees to take paid time off to get their annual check-ups or other preventative routines. Encouraging proactive health management will reduce costs in the long run. 

5. Promote Wellness & Preventative Care

Speaking of preventative routines, promoting wellness and preventive care in the workplace isn’t just a nice-to-have perk; it’s a strategic imperative.

Prioritizing your employees’ health and well-being can have significant long-term benefits, such as lowering the need for frequent and intensive medical treatments, resulting in cost savings. According to a recent United Healthcare survey, 67% of employees who took part in company wellness plans reported experiencing positive outcomes like weight loss, earlier disease detection, and even kicking the nicotine habit. Plus, research reviewed by the Society for HR Management found that each dollar invested in a corporate wellness initiative could yield a remarkable $6 in healthcare savings for employers. So, not only does encouraging employee wellness make for happier and healthier teams, but it’s also a smart move for your bottom line.

6. Offer Voluntary Benefits

Voluntary benefits allow employees to opt-in to more benefits beyond their basic package. For many employees, it’s all about choice and customization. These extra coverage options, such as dental, life, or cancer insurance, flexible spending accounts (FSAs), and discounted gym memberships, allow employees to cherry-pick the benefits that best align with their needs and lifestyles. Allowing flexibility enhances their overall satisfaction and boosts their sense of financial security and well-being.

From a company perspective, offering voluntary benefits is a savvy move. It’s a cost-effective way to augment your benefits package without placing a substantial burden on your budget. These benefits are typically employee-funded, so the financial responsibility rests on their shoulders rather than yours. Yet, the goodwill and appreciation it generates can be immeasurable.

Wrapping it up

With the rising healthcare expenses in Nevada, small business owners need to proactively alleviate the financial burden and guarantee top-tier coverage for their staff. Through the strategic crafting of benefit plans, tailored offerings, thoughtful evaluation of cost-sharing structures, and a strong focus on employee well-being, businesses can effectively manage the challenges of healthcare costs while cultivating a happy and healthy workforce. It’s important to remember that each organization has its distinct circumstances. Hence, a personalized assessment of your unique business needs and expert guidance from benefits professionals are vital in creating a well-rounded strategy that aligns perfectly with your objectives.

Need help crafting the best benefits package for your employees and bottom line? Contact AdvanStaff HR to learn how we’ve helped thousands of local employers with employee benefits.

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