I’m going to lay out a scenario. By the time we get to the end of it, you tell me, does it sound familiar?
Your health plan needed to change, it was just getting too expensive.
Your new plan is still more expensive, but not as expensive. You don’t have any more funds for it, and you’ve got to raise costs for your employees.
You struggled and struggled to figure out how to save money and not put this extra cost on your employees.
You’ve laid awake at night worrying about what they’re going to say, what they think, and how to get out of this. What’s this going to do to their families? It’s an annual ritual.
Now, you have no choice; you have to let them know their health care premiums are going up.
Because how you inform your employees is critical to the happiness and longevity of your company as a whole.
Morale and water cooler talk change.
The story of the modern business owner isn’t exactly easy these days. At least once a year, we have to review our healthcare plan, figure out the best way to keep costs reasonable, and what to do when costs are not reasonable – which has become the norm. In fact, let’s face it, prices are not even rational or justifiable anymore.
Despite what the media says and what many employees believe, as business owners, we don’t want to put these costs on to our employees. It’s difficult enough to make ends meet, without having to pay the extra fees for healthcare, especially with the year-over-year rate increases we’ve experienced in America for the past 20 years.
But, what choice do we have?
We have to tell the employees that their health care premiums are going up again. The business can’t sustain the cost of health insurance without the employees paying more; either the employees pay more, or there won’t be jobs available.
Let this guide help you take a little bit of the pain away from telling your employees. By involving them in the conversation, you can minimize resentment, get them on board with some healthy practices, and build better relationships that will benefit not only your insurance costs but also your bottom line.
Before anything else, you need to have this conversation with your employees ASAP. The sooner they know about the premium increase, the smoother they can adapt to the higher costs.
And by having a conversation with them, you’ll be able to get their agreement that this was the only choice you had. And maybe by listening to their feedback, you’ll get some ideas that might save everyone a little bit of money.
Breakdown of the Cost of Health Care
Over the past 30 years, insurance, billing providers, and doctors have done an outstanding (for them) job of disguising the cost of treatments, lab tests, surgeries, and prescriptions. Unless someone has paid out of pocket for these procedures, nobody truly knows what they actually cost. The billing department of most doctor’s offices and hospitals have created such confusing processes that even attempting to understand billing paperwork can be exhausting. The fact is it’s almost impossible for most Americans to even confirm what procedures or tests truly cost any more.
Perhaps this is why in 2018, the government passed a law that hospitals, doctors, and health providers must provide customers with their costs in advance as well as post them online. However, many providers still do not share this information with patients unless the patients specifically ask.
Most people know the cost of insurance and the amount of their co-pay, but that’s it. And this distorts reality. Learn more about that in “The 6 Words that Killed Health Care”. What are those six words? Here is a hint: don’t be conned into believing that your insurance pays for the rest because ultimately, you do.
So, insurance companies spread out the cost of health care to employers. What you, as the employer, have to pay can be a hidden cost. That reality is that by purchasing insurance for your employees, you are contributing over $1,000 a month per employee for their health care.
In 2016, the family plan health insurance was $18,142 billed to the employer, according to the Kaiser Family Foundation. This rose 5% to $19,616 in 2018, and there appears to be no end in sight. But, your workers only see about $5,547 of that cost, and you cover the rest.
Tell your employees this figure. Let them know the cost per employee, and what you pay so they can have their insurance. There are a few of your employees that won’t believe this number is that high, but most will be surprised.
Take notice of as many reactions as you can. Who among your employees understands your predicament? Nurture these people; they have the potential to become allies. Who is in complete denial? These people will need to be talked to separately to soothe over bad feelings.
This process is what I call converting your employees into EHC’s – Engaged Healthcare Consumers. Becoming an EHC is a process and requires each employee to commit to the process on their own time. The sooner the better for all. During your discussion, compare healthcare cost to your total operating budget and profits. In many cases, health care is one of your highest expenses.
Deductible versus Premiums
Most people will be concerned about what gets taken out of their paycheck and what deductible they will have. This was probably the hardest decision you had to make. Do you choose a higher deductible plan or a higher premium plan? You’ll never be able to satisfy everyone.
Be sure to explain the plan you chose for your employees. Are vision and dental included? Tell them why or why not. Let them know how much extra it would cost for a lower premium plan or lower deductibles, or even better prescription coverage.
Deductions for healthy employees
By now, you should have already checked with your health care plan to see whether there are deductions for healthy employees, age brackets, and frequency of use. Generally, many insurance plans will give you a rate reduction for healthier employees. Employees who do not smoke, drink often, or use their insurance often tend to have lower premiums.
Take a look at your workforce. What’s the general health? Be sure to share with your employees that the healthier they are, the lower the health care costs. You can help them become healthier by starting several of the programs we have listed below.
Working With Your Employees
This is where you will want to get input from your employees. Find out what they want, and how much they’re willing to work with you to get the best benefits at the best price.
If you can get to the last of these three steps—working with your employees to answer their questions—then you are well on your way, as they have started the process of becoming an EHC, and may be well on their way down that road already. In my next column, I will share several specific tactics that can be offered or discussed with your employees once the cultural shift has begun and you see signs of Engaged Healthcare Consumers throughout your workforce.
Dr. Josh Luke is a celebrated speaker, award-winning Futurist, LinkedIn Influencer, a faculty member at the University of Southern California’s Sol Price School of Public Policy, and author of Health-Wealth: Is Healthcare Bankrupting Your Business? 9 Steps to Financial Recovery. Drawing on his experiences as a hospital CEO, Dr. Luke delivers engaging and entertaining keynotes that teach audiences simple concepts on how individuals and companies can save thousands on healthcare.