Benefits Think

How to build inflation-proof benefits for employers

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Inflation is pushing gas, housing and food prices higher, hurting our frontline workers as scarce dollars split in many directions. Most of us, after all, can't afford the upfront investment to own a Tesla, nor do we have our own gardens and cows in backyards. 

The impact of a challenging economic environment has elevated the importance of benefits for the employers and employee populations we advise. We have seen employers add and improve benefits to offset inflation as raises are not able to keep pace. Benefits allow for a form of a raise without increasing payroll taxes or work comp premiums, so that is a big win for employers that are still fighting the Great Resignation and struggling to find help

We are also seeing improved benefits as a strategy to reduce turnover and keep top talent. Businesses are looking for ways to simultaneously help their employees and reduce taxes. There are solutions for all economic and generational tiers in society, including strategies that aren't insurance but lower the tab for most healthcare needs

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The disruption from players outside the insurance industry is a welcome addition to benefits packages. Student loan repayments have been attractive for those trying to draw college graduates to their teams, while tax-advantaged accounts used to purchase healthcare items help offset inflation.  

Our enrollment conversations during this inflation period are changing. Communication to members needs to be clear, concise and simple, as well as include stories that members can retell. Attention spans run shorter in virtual worlds, so it is critical to nail down this messaging. If employees aren't clear on how to best get care, they will go back to old habits. 

As transparency increases, employers and employees understand that there is spread pricing on all types of services inside their benefit insurance packages, and it opens them up to more direct relationships with providers. 

While we can offer examples of hospitals overbilling, I find that the simple example of the CVS MinuteClinic not allowing a cash-pay price if they know you have insurance coverage to be more impactful. Members who receive an invoice of $300 reduced to $216 for a visit — when the cash price out the door is $90 — get frustrated and are left wondering why they are paying for insurance. Employees see what is billed, as well as the discount, and it is still more than the cash price. That opens their mind to new ways of offering benefits. 

Read more: How SAP leans on telemedicine to deliver 'whole-person care'

Another compelling story about why we need to build our benefit plans differently involves how the GoodRX app offers examples of lower cost meds than what members pay with their insurance coverage. Also consider citing public insurance carrier negotiations with hospital systems that go beyond their deadlines and leave members confused on where they can get care. People understand that greed exists in healthcare, and they have become more open to plans that steer members to one hospital system over another. 

Strategically, the dollar-for-dollar match into a health savings account is still a powerful tax reduction and retention strategy. Section 105 plans also are very popular. Anytime we can avoid extra tax it is a win for the employers we serve and their members. This strategy can be used to build reserves to offset future inflation. 

Our partially self-funded clients continue to improve engagement strategies that help employees become smart healthcare consumers. What's interesting is that the plan design spread strategy in changing deductibles hasn't driven consumer behavior change at the member level. However, the educational process of balancing bills that come from greedy hospital systems has strongly driven engagement at the member level. 

Pharmacy strategies are warmly accepted these days. Why would we buy through a pharmacy benefit manager when we can negotiate directly? Supply chain management has long been a proven and accepted way to control rising costs for all things purchased, and it applies to healthcare as well. Direct contracts with all types of providers with fair prompt payment will help beat inflation. 

Read more: How to attack the root cause of a broken healthcare system

Direct primary care also is popular among members with chronic conditions and moves conditions off a health insurance plan for another way to combat inflation. In addition, virtual care is warmly welcomed since it became the default option for receiving care early on in the pandemic. And don't forget the long-standing Section 125 pretax plan to offset inflation as well.

We continue to look for solutions that allow a person to find the right care at the right price. Transparency on quality measures and cost of care delivered inside our laptops and phones are improving and once these technologies are in the hands of consumers, they are empowered to make better decisions. It is an exciting time in healthcare. Our communities need us more now than ever to move into a world of affordable quality healthcare. In the near future, I believe our current healthcare system will be obsolete as alternative modes of care enter our world. 

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