The Current State of Healthcare Benefits

Recently, two surveys were published with great insights into the importance of health insurance benefits:

  1. 2022 Emerging Trends in Health Care Survey” from Willis Towers Watson, Spring 2022
  2. 2022 Health at Work: A Report from Quest Diagnostics” from Quest Diagnostics, Spring 2022

Each illustrates how companies are using health benefits to attract and retain employees. Employers face an unprecedented job market as millions of people leave their jobs. In March 2022, a record 4.53 million people quit their jobs. That surpassed the previous high mark of 4.51 million in November 2021 [statistics from U.S. Bureau of Labor Statistics].

Additionally, the surveys show how companies are struggling to control the costs of offering employee benefits. Not only is this Great Resignation forcing many companies to rethink their healthcare benefits, but so are the costs of those benefits. Healthcare costs have been rising faster than inflation for years, leading to higher premium rates for health insurance. In response, many employers are trying to find ways to keep those costs down.

Controlling the Costs of Healthcare Benefits

The cumulative inflation rate between March 2011 and March 2021 has been 19% [U.S.Bureau of Labor Statistics]. During that same time, the average premium for family health coverage has risen by 47% [Employer Health Benefits, 2021 Annual Survey, KFF].

In simple terms, employers and employees are spending a higher percentage of their revenue on healthcare benefits today than they did ten years ago. It’s no wonder that 94% of US employers say that controlling the cost of healthcare benefits is a top priority [Willis Towers Watson survey as quoted in Human Resource Executive]. This priority is mirrored in a Quest Diagnostics Report that finds 90% of human resource executives believe that employers need to be able to control health insurance expenses more.

“Many employers find themselves in the middle of a perfect storm,” says Lindsay Hunter, senior director, Health and Benefits, Willis Towers Watson (WTW). “Inflation and rising healthcare costs, ongoing emotional and physical wellbeing needs, and attraction and retention challenges caused by a tight labor market are driving employers to carefully evaluate their benefit programs and strategies. In particular, they are looking for ways to make healthcare more affordable for themselves and their employees.”

In the Quest Diagnostics Report, two-thirds of employees think their employer should pay more for their health benefits. Human resources executives also understand the burdens that the costs of healthcare benefits put on their workers. Indeed, more than three-quarters (77%) say they want to lower healthcare benefit costs for their employees but don’t have the tools to do so. [Quest Diagnostics Report].

Fending off the Great Resignation

As noted above, the Great Resignation is putting pressure on companies. They are looking at ways to attract new employees and keep existing ones. In fact, 90% of human resources executives believe they will have to improve benefit packages and increase wages during the next year [Quest Diagnostics report].

“With wages rising, employers can’t afford to support both [pay] increases and increases in healthcare, so controlling healthcare costs is very important,” says Cecilia McKenney, Quest Diagnostics senior vice president, and chief human resources officer. “Employees want us to control healthcare costs and, frankly, help them make better decisions on controlling costs.”

“In a time when skilled talent is [leaving] organizations at a rapid pace,” adds Lindsay Hunter from Willis Towers Watson, “managing benefit cost for both the employer and their employees is paramount.”

It’s not just companies that think better healthcare benefits can attract new employees. Thirty-six percent of employees thinking about changing jobs cite the need for better healthcare benefits as a reason why they are looking.

What Can an Employer Do?

Faced with these issues, what can a company do? How can a broker help them navigate today’s benefits and reduce the associated costs?

Look at Nexben’s ICHRA Solution.

Our online platform makes setting up an ICHRA easy. Beyond the basics of entering company information into our system, employers can define employee eligibility based on classes. They can also walk thru the guide on our system to establish a contribution amount. They have access to tools along the way, such as finding the lowest-cost silver plan in their area, to provide them with an approximate cost to guide them in establishing the contribution amount.

After plan selection and enrollment, our platform makes the administration of the ICHRA a breeze. Monthly payments to all the carriers providing employee coverage can be paid with one click of a button. Our ICHRA payment solution facilities ACH payments to each carrier based on the individual coverage selection. Employees do not need to front the cost of the insurance policy they select. Their portion of the premium, if any, may be payroll deducted by the employer. Changes due to a Qualifying Life Event are also taken care of within the platform (the carrier will have to be notified separately by the employee as well).

Benefits of an ICHRA

Our ICHRA can help control health benefit costs by leveraging the individual healthcare insurance market. These policies are guaranteed issue, so when an individual purchases health coverage, their health history is not taken into account to determine their premiums. Only their age, location, and tobacco use are considered.

By comparison, when a group purchases a traditional group health plan, the history of the group can be taken into account by the insurance company. This could result in hefty price increases year-to-year if there were a high number of claims.

So, the guaranteed issue may help drive down the costs of health insurance to the employee.

Since a company is in charge of the amount they contribute to each employee in the ICHRA, controlling costs is in their hands. They simply need to determine the dollar amount they plan to contribute. Also, if an employee does not use all of the employer’s defined contribution amount, the employer keeps that money.

ICHRAs have the opportunity to save both employer and employees money on healthcare coverage. See our website’s case study area for examples of our ICHRA controlling healthcare benefit costs. In particular, look at the case study titled “Nexben A Solution When You’re Out of Solutions.”

ICHRAs are also flexible enough that small employers can offer health insurance for their employees. Unlike traditional group plans, there is no minimum enrollment requirement with an ICHRA, allowing companies of any size to offer one without worrying about the number of enrollees.

Large employers can also take advantage of ICHRAs. Do they have employees in multiple states? An ICHRA can help. How about part-time or seasonal employees? Again, look at an ICHRA, they are structured to support those employees as well as full-time and salaried employees.

For more information on Nexben’s ICHRA solution, click here for a short introductory sheet.