A strategic approach can help keep rising health benefits costs from placing undue burden on employers and employees.
At this time of year, companies find themselves working to assess finances, evaluate operations and find ways to approach the coming months in a more strategic way. Taking a closer look at employee benefits offerings can be a great place to start, particularly at a time when health benefits costs are on the rise.
Employee health and wellness considerations are beneficial to workers and companies alike. And although they rank among an organization’s most important offerings, they also rank among the most expensive. Here, BCH’s employee benefits professionals cover ways for companies to keep health benefits costs better controlled while also looking out for their most important asset — their people.
Why Are Healthcare Costs Rising?
Before exploring ways to keep health benefits costs under control, it’s important to understand the reasons behind recent increases. So, why are healthcare costs rising? It’s due to a combination of factors.
- Economic Considerations: Ongoing inflation, increased costs related to hospital fees and rising prescription drug prices all contribute to shifts in U.S. health insurance costs. They often result in higher employee premiums as employers adjust budgets to meet with expenses.
- Changes in the Healthcare Field: In addition to administrative costs such as insurance considerations and billing, which contribute to increases, the medical industry has undergone its share of transitions in recent years. Technological advances that streamline surgeries and improve patient care, for instance, also require costly equipment and treatments. Meanwhile, mergers between healthcare providers and hospitals reduce competition, often resulting in price hikes.
- Age & Health Considerations: Extended life expectancies, paired with Baby Boomers’ entrance into their senior years, place added strain on the healthcare field. This is because older individuals often require more medical care. In addition, there’s an increased prevalence of chronic conditions such as diabetes, heart disease and various cancers in the general population. As the need for ongoing medical care and medications persists, an already strained healthcare industry stretches further, driving prices up.
BCH Tip: Our Rising Costs Quick Sheet offers an overview of the issue and tips to help guide team member talks.
Keeping Health Insurance Costs in Check for Your Company
As the employer, health insurance costs start with you. When planning for the coming year, your first step should be to reach out to your employee benefits provider for a better understanding of your company’s unique situation. What did your plan cost in previous years? Will costs increase in the year ahead? Are there better options out there?
Now is the time to lay all your cards out on the table — the benefits that matter most to your company and team members, your feelings regarding your current plan and openness to finding something new. Your provider should be comparing your rates against those of similarly sized companies to ensure your plan is competitive, and should be prepared to help you find a better option if the need arises.
BCH Tip: Our Benefit Cost Cuts Overview Sheet offers effective strategies to consider.
Be Honest with Employees About Health Insurance Cost Increases
No matter how hard your team searches for affordable benefits options, there are times when increases are unavoidable. In 2025, for example, health insurance costs are expected to rise by an average of 7.7% for employers. In such situations, honesty is the best policy.
Bring your team together to discuss the measures you’ve taken to keep costs contained, the research you’ve done into available options and what that potential increase might look like. In most instances, an increase will be along the lines of a few extra pennies or dollars from each paycheck. Allow team members to ask questions, voice concerns and get an overall picture of the situation. And remember, you aren’t in this alone. Companies everywhere are working to combat similar issues in a way that works for them.
BCH Tip: Our Health Care Costs Brief Sheet offers details into the state of health care benefits and ways companies like yours are addressing the issue.
Get Your Team Actively Engaged in Health and Wellness Benefits
Even the most comprehensive health and wellness benefits won’t do much good if team members don’t take advantage. Make it a point to gauge what is most important to your team members and tailor benefits packages around findings. This might mean incorporating options that give employees the chance to earn financial rewards for meeting step goals, or those that offer free or low-cost virtual physician appointments in lieu of office visits.
Once you’ve selected a plan, regularly communicate available benefits to team members. Periodic reminders help to keep minds focused on healthy practices — while also keeping the benefits offerings they’re paying for from going to waste.
Any changes to your company’s health benefits costs or plan can feel stressful, but having a trusted team in your corner can make a real difference. If you have questions on any of the above, or if you’re interested in learning more about BCH’s employee benefits offerings, feel free to contact our team. We are always happy to help.