Health care costs continue to rise.
According to the Kaiser Family
Foundation (KFF) — a nonprofit organization that provides facts and analysis on major health care issues facing the
nation — health care premiums have risen
between 50 percent and 60 percent over
the past five years. Comparatively, in this
same period, inflation rose 15 percent to 16
percent and wages 16 percent to 18 percent. In fact, the average cost of health care
insurance for a family of four is now
$11,000 per year.
Yet there are methods to help curb the
costs, according to Gary Stroud, Ph.D.,
program chair of the human resources
management major at Franklin University.
“While health care premiums for your
company may be above or below the average, there are a number of ways that you
can reduce those premiums and still provide coverage for your employees,” Stroud
says. “The good news is, these cutbacks
will actually boost morale in the workplace
and allow you to keep good employees.”
Smart Business talked to Stroud to gain
more insight on what a company can do to
keep health care premiums at manageable
levels.
What concerns should a company address
when reviewing health care costs?
It is essential to make certain that those
in charge of human resources are fully
trained for their function.
The HR staff needs to be aware of current
laws, rules and regulations pertaining to
employee benefits and to fully understand
and apply them. They must stay current on
federal and state laws and, in some cases,
local laws and ordinances. As a company,
your role is to provide this staff with the
resources for adequate training or to hire a
human resources manager who has the
expertise and background to be abreast of
the newest information. Training needs to
be ongoing, as skills fall out of date, laws
change, and rules and regulations are continually evolving.
To achieve optimum ongoing knowledge
development, it is also important that all of
your managers become involved in the
respective associations and organizations
that cater to their profession. For example,
your key HR people should be actively
involved in the Human Resource
Association of Central Ohio and the
Society of Human Resource Management,
and managers should participate in the
American Management Society. Those
with benefits oversight should involve
themselves in Worldatwork, a compensation and benefit organization.
What are some specific ways to reduce
health care premiums?
Conduct an audit of what health care-related events have occurred in the past,
determine what is needed by the majority
of the employees, and set your priorities
accordingly. Look at each area of coverage
and provide substantial coverage for the
catastrophic things that cannot be foreseen, and allocate responsibility to employees for the more common events that can
be expected.
A good example is to avoid coverage of
benefits for which everyone would be
required to pay, but only a few will use,
such as hospitalization. Why should your
employees or the company pay a premium
for overnight hospital stays when it is
unlikely that the majority of your employees will need such a benefit? Talk with
your agent about a policy that excludes
coverage for the first one or two nights stay
and then kicks in for the third and succeeding nights. Perhaps include a provision that if the hospital stay is more than
seven nights, all nights would be covered.
Drug plans are another area that can be
quite costly, yet with proper prioritization
can meet the needs of most of your
employees while at the same time cutting
premium costs.
What about coverage that is mandated by
law?
While you must comply with the mandates, you must also be aware of what
areas are not mandated and how those can
be used to cut costs. This is why it is vital
that people reviewing benefits plans are
current on all of the changing laws and regulations.
What else?
Communication is essential. Convey
clearly to all employees what you are doing
to meet coverage requirements and still
keep costs down. Provide information on
how employees can save for the future and
establish incentives for them to plan
ahead. Tactfully let them know that it cannot be expected of the company or government to supply all their personal needs.
Also, when recruiting members of the
work force, be mindful of the job skills
needed and hire only those with the appropriate qualifications. If you do not possess
effective recruiting skills or don’t have the
time to devote to this key area, consider
either hiring a recruiting expert or company to provide this function.
GARY STROUD, Ph.D., is program chair of the human
resources management major at Franklin University in
Columbus. Reach him at [email protected] or (614) 947-6165.