I meet a lot of business owners in my work, and very rarely do I meet someone who genuinely wants anything less but the best for their employees. These are the leaders who, even in the face of an opaque and unwieldy healthcare system, invest significant portions of their revenue to give their people better benefits.
But in our healthcare system, even the “right thing” can backfire to the point that no one wins– not the business owner, not the employees, and not the families of the employees.
Higher Costs, Less Coverage
This is a true story:
I spoke with the owner of a lumberyard who covers 94% of premium costs for employees, which is well above the average and fairly generous. To achieve this, he spent an additional $7 on their hourly rates, yet the deductible was still $7500, and his broker had recently informed him that he should expect a 43 percent cost increase in the coming year.
Yes, 43 percent.
With a $7500 deductible, this employer’s generous approach to benefits was already not manageable for his employees, many of whom are unskilled blue collar workers. For those families, a medical emergency with that kind of price tag would be devastating financially, which hardly feels generous from the employee perspective.
And then the plan is due to get worse next year, forcing everyone involved to spend more to get less. That’s simply unsustainable. And the worst part is that this employer was actively trying to do right by his employees, using all of the resources he had available to him to do so.
When the “Right” Choice is Hidden
In a situation like this one, the most affordable path for the employer and his employees might be an aggressive self-funded strategy, or at least a partially self-funded strategy. In the worst cases, he might be better off dropping what he contributes to employee healthcare so that his people qualify for a subsidy on the healthcare exchange.
That approach, on the surface, can sound like the employer wanting to cut costs, but the “penalty” he faces could half his total expenses while at the same time giving his people access to better care. At that point, his challenges would be around educating employees on how best to take advantage of the healthcare exchange to get the plans that best suit them and their families.
Unfortunately, businesses across the country face challenges like this every year, and the best solutions are not always the intuitive “right” answer. You need an advisor who can see the big picture of both your business and your potential options to help you find a path that is sustainable for the business without sacrificing the employee experience.
See the Full Picture of Your Benefits Options
Solutions aren’t always easy, of course, but as soon as you see that your healthcare costs are trending in an unsustainable direction–which is the case for nearly all businesses, eventually–you should dig deep for every possible switch to flip and button to press to put you on the path to sustainability.
Otherwise, everyone loses. But it is possible to win.