What’s on the horizon for health benefits in 2020? A report by PwC’s Health Research Institute projects an increase in medical costs that will affect the employer insurance market for the upcoming benefit year. Medical costs have been increasing each year, but at a lower rate since an 11.9% spike in 2007, finally remaining flat at 5.7% for the last two years. Still, healthcare spending on things like premiums and deductibles for employer-sponsored plans have continued to increase exponentially.
The projected 6% increase is being attributed to three main factors: drug spending, chronic diseases and mental health.
- Drug spending is projected to grow faster in the next year as spending on generic medicine wanes and new, more expensive specialty treatments continue to enter the market.
- Chronic diseases are on the rise and will continue to plague the population as more chronic patients are diagnosed every day. Employees with chronic illness cost their employers nearly four times more than a healthy individual.
- Mental health awareness has increased, and both employers and employees are making it a priority to address mental health issues. Employers are encouraging employees to use mental health services by expanding access and promoting the use of these services and employees and their families are taking advantage of the greater access and utilizing it.
Despite the increases in medical costs and healthcare spending, employers are finding ways to keep their medical spending in check while still promoting the importance of health and wellness among their employees. According to a 2019 benefits and trends survey, more than a third of employers say they’re making changes to their benefits package, or plan to do so in the near future. Employers are also looking into more alternative options that can help reduce spending, such as worksite clinics, which offer increased access to preventive services and access to telemedicine, which offers doctor care at a lower cost and often with less time away from work compared to traditional doctor visits.
Offering the “right” employee benefits is one of the biggest HR challenges that employers have to deal with today in order to be successful in recruiting and retaining talented employees to grow their business. It’s true that benefits aren’t what they used to be, but that’s not a bad thing. Employers now have more opportunity than ever to really customize a benefits system that their employees need and want. By identifying and eliminating benefits that have little to no employee participation, employers can save money without really taking anything crucial away from their employees.
Another way employers are saving money while still offering competitive benefits is by partnering with a PEO or HR Outsourcing firm who provides customizable benefits packages as well as benefits administration services. A PEO can also give smaller employers access to large-group platforms that they could otherwise not afford to help control the rising cost of benefits while also alleviating the hassle of managing those benefits so that the employer can just focus on continuing to grow their business.
Since 1995, Emplicity has provided a smarter, more secure, and integrated platform of employer services to its 300 business clients and their 8,500 employees. As a Professional Employer Organization, or PEO, the California-based HR outsourcing firm simplifies the compliance, administration, and support businesses need in the areas of employee benefits, payroll, and human resources technology.
NOTICE: Emplicity provides HR advice and recommendations. Information provided by Emplicity is not intended as a substitute for employment law counsel. At no time will Emplicity have the authority or right to make decisions on behalf of its clients.