Improving budget certainty in a turbulent market

The economic climate of the last few years has made employers keenly aware of the need for control and budget certainty. As companies struggle to protect their bottom line, they are taking a closer look at their expenses – and are paying close attention to their health benefits plan.

Companies are starting to question the traditional health benefits model, which typically results in significant increases in plan premiums each year.

The uncertain economy is impacting employees’ perspectives as well. According to The Sanofi-Aventis Healthcare Survey 2010, 77% of respondents agree that the economy has made plan members more aware of the value of their health benefits plan. At the same time, employees are extremely sensitive to changes to their plan - health and dental benefits in particular. With health benefits seen as a significant tool to build retention and attract top talent, employers are challenged to balance cost savings with maintaining an attractive benefits plan.

The concept of a group plan that incorporates a deductible, which functions much like the deductible in a car insurance plan, is resonating with more and more with medium and large-sized employers. The option to limit their direct costs for employees’ expenses to a pre-determined amount (stop-loss level), then pay a lower insurance premium to cover costs above that amount, just makes sense. This would replace the typical fully insured plan where expenses are covered by the insurer from the first dollar of claiming. As a comparison, you wouldn’t pay a premium on the costs of maintaining your car – but you do need insurance to cover any significant or unexpected costs that may arise. By offering health benefits plans that are based on this same concept, employers can not only save money but they can avoid significant premium increases since the insurance portion of their plan is greatly reduced.

Smart business owners recognize that to survive in an uncertain market, they must reduce their exposure to risk in areas that make sense. Selecting the right health benefits plan can help to provide the budget certainty and employee retention they need to weather the storm.