Here's what you know: In 2016, 61.6 percent of employers reported a medical insurance premium increase. Premiums went up an average of 8.7 percent in all industries, ranging from 10.2 percent in Utilities to 6.8 percent in Insurance (Benefits USA). We're expecting increases to be even greater in 2017.
Here's what you don't know: What are companies doing to effectively manage these rate increases?
"A large majority of employers are increasing the employee portion of medical premiums."
Know your strategy
Employers report implementing several cost reduction strategies in 2016. The number-one method reported by employers was increasing the employee portion of the premium. In fact, 57.6 percent of employers reported doing so in the 2016 BenchmarkPro survey results. Rounding out the top three methods of cost reduction are increased deductible levels, as reported by 48.3 percent of employers, and offering a choice of deductible levels, as reported by 23.4 percent of employers.
What does all this mean? Essentially, Human Resources Managers need to make sure they're covering all of their bases as 2017 gets underway.
Communication is key
"It all boils down to what you say and how you say it."
As medical premiums go up, it's absolutely critical that organizations know how to talk to their employees about this change – especially if they're going to increase the employee portion of medical premiums. Telling your employees is going to be tough, so you have to be prepared.
Two experts within the consulting division at Compdata Surveys & Consulting – Greg Wolf, Managing Principal, and Dane Sinn, Senior Consultant, CCP – shared a couple of key tips for HR Managersf looking to more effectively communicate these rate increases to their employees. It all boils down to what you say and how you say it:
- Be transparent (what you say): First and foremost, your employees need to know that you have been transparent and honest with them regarding the new cost of their health insurance. Let them know that the plans you've chosen offer the best coverage for the best price for the company at this time, and tell them exactly how much both employers and employees will be contributing. For example: "The organization will continue to pay 70 percent of the premium cost, and employees will continue to pay 30 percent of the cost. Yes, your cost is increasing, and so is ours, but the company's percentage of contribution will remain the same." Providing some context may help employees better process the overall increase.
- Consider message delivery (how you say it): If the organization as a whole will be affected, it's a good idea for the message to be given by the HR department. Communication with a clear, consistent focus on how the company will be impacted will help to make the increases less personal for the employees. It's also important for HR Managers to be prepared to answer specific questions that may arise from individual employees concerning their take-home pay, while at the same time making sure to align with the broader HR message – for example, if employees are anticipating a 3 percent raise and their medical insurance premiums are increasing 8.5 percent, they will understandably want a sufficient explanation.
For more information on navigating these insurance premium increases and other compensation challenges you may be facing in 2017, don't hesitate to reach out to us at Compdata Surveys & Consulting. You can reach us at (800) 300-9570.