Healthcare costs are rising, and employers are looking for tactical ways to lessen the financial burden for their employees.
By Zee Johnson
U.S. employers are in a tough spot—inflation is on the rise, budgets are tightening, and yet, many are looking to provide their employees with affordable healthcare as those costs increase too. According to Mercer’s Survey on Health & Benefit Strategies for 2024, about two-thirds of large employers say that improving healthcare affordability is an important or very important priority for them over the next several years.
Rob Fouhy, principal of total health management at Mercer, says it’s critical for organizations to provide employees with quality healthcare because these days, it’s a requirement on both ends. “Providing affordable healthcare is table stakes for employees. It’s become an expectation as part of employment,” he says. “Employers also need to keep the standards for the affordability of medical coverage under the Affordable Care Act in mind, as unaffordable coverage may trigger IRS assessments.”
He says that healthcare is often a significant portion of benefit spend, so keeping costs manageable while providing attractive offerings tricky, but possible and important. The report points to some levers and strategies that organizations are using to make healthcare affordable to both the employer and employee.
- 15% of large employers are offering free employee-only coverage in at least one medical plan.
- 18% of large organizations and 34% of very large organizations are utilizing salary-based contributions, linking the size of the paycheck deduction to the level of pay.
- More than 33% of large employers offer a plan option with no deductible or a very low deductible and minimal out-of-pocket cost when care is needed.
The report also showed that organizations are employing other perks like subsidizing phone and/or internet costs for remote workers (21%), offering free or subsidized meals for on-site employees (21%), providing refinancing assistance for student loans (14%), and more.
Fouhy says that the point of it all is to assist employees with issues that affect their health but aren’t always directly provided by the health plan. “It’s important to look at healthcare as a broader topic than just the health plan. We are seeing employers look into innovative benefits to address employee needs or the ‘moments that matter’,” he says. “These are things like caregiving benefits, family-building benefits, financial well-being, mental health, and others.”
Further, improving the employee experience, Fouhy says, is another mechanism businesses can use to lower healthcare costs and support well-being. “An improved employee experience will lead to better utilization of healthcare, which will lead to better outcomes and lower costs. So, investing in the employee experience is important, as we’ve seen instances where employees that aren’t supported can actually result in higher costs,” he says. “If an employee has an enhanced experience overall, they will utilize higher-value care.”
Healthcare is nothing short of complex, and companies must remember that employees value benefits that support and better their financial well-being, especially during uncertainty.