How to keep employees’ rising health care costs in check

Medical expenses are among the fastest rising costs affecting US households, with many Americans on track to pay half as much towards their health insurance as their mortgage in the next decade.

With deductibles rising faster than wage growth or inflation, certain fixtures of medical care such as accident coverage, hospital visits, and critical illness plans have begun to resemble “deductible insurance.” Instances where consumers once would have received financial lifelines to handle unforeseen medical events are now more likely to cost them out of pocket.

Due to the additional strains caused by the pandemic, affordable medical costs have never been more essential. The difficulties of the past two years have heightened the workforce’s awareness of overall health, and the importance of mental and financial wellness.

Subsequently, employers have had to up their game in order to prioritize their workers’ wellbeing. One of the most formidable challenges currently confronting HR and business leaders is balancing the needs of providing essential benefits against bottom-line expenditures.

With proper strategic elements in place, organizations can rise to the occasion, offering support systems for their employees that extend beyond office walls and working hours. Here’s how employers can rethink the role they play in their employees’ lives, without falling victim to soaring costs.

Personalized benefits – beyond just health insurance

Workplace-sponsored voluntary benefits have long been a critical (if occasionally fraught and ever-changing) fixture of the employee-employer relationship. But despite voluntary benefits’ ability to mitigate rising deductible costs, participation in voluntary benefit plans remains remarkably low.

Largely to blame is a lack of awareness regarding which voluntary benefits are available to employees and the extent to which these benefits can promote greater physical and financial wellness. Some organizations already support a wide selection of benefits but have failed to successfully advertise them internally or explain the sometimes-complicated minutiae of these offerings to their employees.

Communicating directly with employees about the functions and attributes of available benefits is a great first step for employers who want to provide financial and wellness support to those who work for them. Such active engagement fosters trust, loyalty, and deepens the employer-employee relationship.

While it is vital for employers to facilitate active engagement and employee self-education regarding available benefits, it is equally important for them to do their due diligence when choosing which benefits to offer in the first place. In response to the unique needs arising from COVID-19 (and the heightened expectations for them to be addressed), HR leaders have started going the extra mile to prioritize benefits that deliver tangible value to employees’ lives in a tailored, effective way.

One-size-fits-all tends to fall short in alleviating the costs and burdens of day-to-day health care, mental wellness, or financial commitments. In reality, the daily needs of a 44-year-old with three kids is drastically different from those of a 24-year-old living alone. It is up to HR teams to not only recognize that these discrepancies exist, but to understand what benefits will best suit every manner of individual within the organization. Only a highly personalized array of benefits can keep health care costs in check, and only an empathy-driven approach to benefit selection – one that takes the needs of every individual into consideration – will yield effective benefits.

Match people with the benefits they truly need

In today’s employment ecosystem, there is much more that employers can do to build trust, retain talent, and help employees with their bottom line when it comes to benefits. Three subcategories ripe for employer engagement are mental, financial, and physical health.

Mental health: In the decade preceding COVID-19, longstanding stigmas around mental health had already started to fall away, but the emotional strains of the pandemic have accelerated this trend of transparency and honesty around mental wellness needs. In order to meet the moment and do right by overwhelmed employees, employers can offer benefits that speak to those needs. Mental health days (with no “sick note” needed), subsidized visits to a therapist, paid miscarriage leave and student loan refinancing support are all great resources that organizations are beginning to implement to give workers a huge boost in their daily mental wellbeing.

Physical health: Although physical ailments are at times easier to pinpoint and understand than their mental counterparts, our physical health needs still often go overlooked. In a culture where many professionals tend to prioritize work for the sake of financial health, their bodies ultimately pay the price. Late starts or early finishes to the day allowing time for exercise, gym pass sponsorships, or regular in-office workout classes are all good ways not only to incentivize employees to lead healthy lifestyles, but for employers to let employees know they care about their physical wellbeing. What’s more is that healthier, more energized employees are likely to be happier and more productive at work and ultimately stand to improve a business’ bottom line.

Financial health: Financially speaking, our lives can sometimes feel like a never-ending cycle of bills and bank account stress. Unfortunately, the reality for most new employees or those still early in their careers is that their salaries are still modest. That is not to say that every employee deserves a fast-tracked pay bump, but regular, needs-based alleviations such as paid or subsidized family leave and childcare, expensed groceries, and transportation stipends can mean the difference between a paycheck-to-paycheck lifestyle, and the ability to start accruing some level of personal wealth and financial stability.

Looking towards the future: Be poised to adapt

It is important for business leaders and HR professionals to recognize that our employment landscape is changing rapidly. Regardless of COVID-19, many of the trends discussed here are likely to outlast the pandemic that catalyzed their rise.

Even those who are providing personalized voluntary benefits effective at addressing the mental, physical, and financial health of their employees mustn’t rest on their laurels. Health care costs are likely to keep rising and rapid changes in the employment ecosystem are likely to continue. Employers who are able to keep their pulse on wider insurance and benefits trends while maintaining an ongoing conversation with their employees about shifting needs and expectations will be the most successful at improving the lives of their employees while still doing well with their own bottom line.

Sina Chehrazi is co-founder and CEO of Nayya.