Why Do Health Care Premiums Increase?
Is there anything you can do about it?
A good step toward getting your group health care insurance costs under control is to understand why your premiums increase. While inflation plays a big part, there are other important factors:
- New technology and specialized medications save lives, but have a hefty price tag
- People are living longer, which increases the number of illnesses they have to treat
- Common chronic conditions often require long-term medical attention, including office visits, prescriptions, outpatient treatments or emergency care
- The number of covered lives
- The insurer’s administrative costs.
How to Reduce Costs
Even before you get to your annual health insurance enrollment, there are things you can do to help lower health care costs:
- The more employees you hire, the lower your health care costs. Insurers are willing to offer lower premiums if there are a lot of employee premiums to cover the risk of a high medical bill.
- If you have fewer than 10 employees, you can increase your buying power by joining a health insurance group with other firms provided they are in the same state.
If the annual renewal period is imminent, consider these actions to lower costs:
- Offer preventative wellness plans. These plans often provide free medical services including low-cost flu shots, cancer screenings, non-smoking seminars, and mental health phone counselors — all can improve employees’ health.
- Reduce your coverage costs by not offering dental or vision coverage
- Choose a high-deductible health plan (HDHP). These plans have low premiums, but employees must cover more of the costs. If you supplement it with a health savings account (HSA), employees can save for medical expenses with tax-exempt dollars.
- Choose a plan that has a high maximum out-of-pocket requirement and low premium. The employee will have to cover more of the medical costs.
- Compare insurance providers to find the best costs.
Please call us if you would like to explore some of these options further.
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Why Do Health Care Premiums Increase?
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