It can cost a business with 50 employees $1 million or more for insurance coverage. Healthcare cost control is therefore one big way the HR department can improve profits. Cost control should start by measuring and auditing health-care costs. One survey several years ago found that while the standard for claims errors was 3%, the actual percentage of claims with errors was about 6.3%. Consultants who audit employers’ health-care payments estimate up to 8% overpayments.
Beyond that, for many employers, deductibles and co-pays are the low-hanging fruit in health-care cost control. For example, at least 20% of employees were enrolled in high-deductible plans in one survey. Employers take other cost-control steps. For example, employees use tax-sheltered health savings accounts (HSAs) to pay for low dollar (not catastrophic) medical expenses.
Some employers offer defined contribution health insurance plans. Like 401(k) plans, defined contribution health insurance plans tie each employee’s health-care benefits to what they and the employer contribute. For employers, it can be advantageous to offer incentives to motivate sustained health-care behavior change and promote a culture of health in the workplace. Incentives can boost wellness program participation, but the research is mixed.
