During an initial meeting with a small group prospect (26 employees), the business owner expressed his dismay over the continual double digit increases his company had been receiving each calendar year on their group medical plan. He was looking for suggestions on how to reduce the cost of providing healthcare benefits to his employees.
Since this employer was not yet utilizing a High Deductible Health Plan (HDHP), we explained the reasons why many employers were now turning towards these plans and implementing a powerful tax advantages of a companion tool known as a Health Savings Account. By using an HDHP, the employer can lower the premiums for the group health plan and shift a part of the cost for providing healthcare to the employee. By adding an HSA, both the employer and employee can benefit from reduced healthcare costs and beneficial tax savings.
The business owner selected us as his new Broker of Record, selected one of the HDHP plans we presented and paired it with an HSA plan. The new plan provided him with an annualized savings of just over 10%, which on his group health bill of $280,800 equated to approximately $28,000 annually. From the savings, he decided to provide each employee with a $500 plan year contribution toward their HSA plan (divided among the 26 pay periods) which still yielded him a $13,000 cost savings for the current year. Overall, the changes provided both the employer and employees with a successful cost and tax saving strategy.
We can review your benefits program design to present you with several cost-containment strategies.