How to Tackle Rising Healthcare Costs for Your Small Business
If you're a small business owner watching your healthcare premiums climb year after year, you're not alone. The numbers are staggering and frankly, overwhelming. According to recent industry data, small businesses have seen healthcare costs increase by an average of 7-8% annually, with some experiencing double-digit spikes that can devastate carefully planned budgets.
We understand the weight of this challenge—trying to attract and retain good employees while keeping your business financially stable. Every dollar spent on healthcare is a dollar that could have gone toward growth, equipment, or simply keeping the lights on. The frustration is real, and the pressure is mounting.
But after years in the benefits management space here's what we've learned: while you can't control the broader healthcare market, you have more options than you realize.
Start With What You Have
Before exploring new territory, take a hard look at your current situation. If you're working with a broker, now is the time for a candid conversation. Don't just accept the annual renewal without question. Tell them exactly what's happening, whether it's employees avoiding care due to high deductibles, confusion about coverage, or simply unsustainable premium increases.
Ask for alternatives. Request they present multiple carrier options, different plan designs, or cost-sharing arrangements you haven't considered. A good broker should be working to find solutions, not just delivering bad news about rate increases.
The reality is that insurers and carriers are increasingly focused on delivering competitive premiums rather than passing along every cost increase to employers. While historical data shows significant volatility, many carriers held rates relatively stable from 2019 through 2021, absorbing some increases rather than losing clients to competitors.
Expand Your Search Beyond Traditional Options
Consider working with independent healthcare providers and managed service partners who specialize in cost containment. These organizations often have relationships with networks of providers willing to offer services at negotiated rates, potentially saving your business 15-30% on healthcare spending.
If you're already working with a Professional Employer Organization (PEO), dig deeper into their partnerships. Many PEOs have relationships with benefits providers that can offer alternatives to traditional insurance models. If you're not currently using a PEO, it might be worth exploring as they can often leverage group purchasing power to access better rates than you could negotiate independently.
Education: The Most Underutilized Tool
One of the most effective cost-control strategies is also the most overlooked: employee education. Too many workers are paying out-of-pocket for services that their existing plan would cover, simply because they don't understand their benefits.
Health Savings Accounts (HSAs) are a perfect example. These accounts offer triple tax advantages—deductible contributions, tax-free growth, and tax-free withdrawals for qualified expenses. Yet many employees either don't contribute or don't maximize their contributions, missing opportunities to reduce both their tax burden and out-of-pocket healthcare costs.
Similarly, wellness programs aren't just nice-to-have perks. When employees engage with preventive care, chronic disease management, and wellness initiatives, it can reduce overall plan costs by catching health issues early and encouraging better health management. The key is communication, and employees need to understand not just what's available, but how these programs can save them money.
Strategic Gap Coverage
Sometimes the most cost-effective approach isn't finding cheaper primary coverage, it's strategically filling gaps with voluntary benefits. Supplemental insurance products, like those offered through Colonial Life, can provide employees with affordable coverage for specific scenarios that might otherwise result in significant out-of-pocket expenses.
For example, accident insurance, critical illness coverage, or hospital indemnity plans can cost employees just a few dollars per paycheck while providing thousands of dollars in benefits when needed. This approach allows you to maintain a higher-deductible primary plan (with lower premiums) while ensuring employees aren't financially devastated by unexpected health events.
Moving Forward Together
The healthcare cost challenge isn't going away, but neither are the solutions. What's required is a willingness to look beyond traditional approaches and work with partners who understand the complexity of today's benefits landscape.
At Meridio, we've helped many small businesses navigate these waters by providing a comprehensive benefits management service that goes beyond simple insurance placement. We work to understand your specific challenges and employees' needs, then build strategies that balance cost control with meaningful coverage.
The key is partnership—working with professionals who see your success as their success and who bring both industry expertise and genuine commitment to finding solutions that work for your unique situation.
Your business deserves better than accepting whatever rate increase comes your way. With the right approach and the right partners, you can take control of healthcare costs while still providing the benefits your employees need and deserve.
