With healthcare costs on the rise, many businesses feel the pressure on their bottom line.
According to the Wall Street Journal, national healthcare expenditures surged by 7.5%, reaching $4.867 trillion and accounting for 17.6% of the U.S. GDP​. For employers, health insurance premiums are projected to rise nearly 6% in 2025, adding even more financial strain​.
If you run a small business, you know that every line item on a health plan matters ăƒ¼ yet hidden fees and overlooked inefficiencies often drain budgets without anyone noticing.
That’s where insurance brokers step in. In addition to managing a plan, an experienced broker uncovers opportunities. From renegotiating carrier rates to identifying underused benefits, brokers can make sure health plans deliver real value without unnecessary expense.
In this article, we’ll explore seven practical ways brokers can help businesses save on health plans, turning overlooked details into measurable savings. With insights from Terri Yurek, you’ll learn how to maximize your health plan’s potential while keeping employees happy and costs in check.
Hidden Costs in Health Insurance Premiums
Health plans often come with a price tag that’s hard to decode. While premiums and deductibles are easy to spot, the real costs hide in the details, quietly eating away at budgets.
For businesses, these hidden costs can add up quickly, often going unnoticed until the damage is done.
According to a study published in JAMA, administrative costs, for example, represent approximately 15% to 25% of total healthcare spending in the U.S. These expenses include billing, coding, and other insurance-related tasks, often overlooked as significant cost drivers​.
Cost-sharing reductions (CSRs) can help manage out-of-pocket costs for employees, particularly those enrolled in silver plans through the ACA marketplace.
So, what are these hidden costs? They frequently include:
- High administrative fees: Carriers or brokers may charge fees that exceed industry norms.
- Out-of-network expenses: Employees unknowingly using providers outside the network can incur avoidable charges.
- Underutilized benefits: Programs like telemedicine or wellness incentives that employees rarely use.
- Inefficient prescription plans: Missed opportunities for savings through generic substitutions or mail-order options.
Understanding these overlooked areas is the first step toward building a cost-effective health plan. By identifying where the money goes, brokers and employers can make smarter, more informed decisions to save both time and resources.
About Health Insurance Premiums
Health insurance premiums are a critical component of health benefits, and understanding how they are calculated is essential for employers and employees alike.
These premiums are determined by various factors, including the age and health of the insured, the type of plan chosen, and the level of coverage desired. External factors such as inflation, healthcare costs, and government regulations also play a significant role.
Employers can manage health insurance premiums by carefully evaluating plan design and benefits, improving employee education and engagement, and exploring alternative plan designs. Through a proactive approach, employers can confirm that their employees have access to affordable health coverage while also controlling costs.
7 Strategies for Identifying Cost-Saving Opportunities
Uncovering hidden savings in health plans requires data analysis, negotiation, and creative problem-solving. Diving into the details of employee usage patterns and plan structure helps brokers and employers pinpoint areas for improvement.
These strategies focus on reducing waste and maximizing the value of every dollar spent:
Strategy #1: Analyze Plan Utilization Data
The first step to cutting unnecessary costs is understanding how employees use their health plans.Â
Brokers review claims history and usage patterns to identify features employees don’t use or overuse. Analyzing employee premium contributions provides insights into the financial impact on both employees and employers, then helps identify areas for cost savings.
For example, if data shows that employees rarely use telemedicine services or certain wellness programs, employers might consider adjusting these options to reduce costs. On the flip side, overused features – such as out-of-network care – highlight where education or plan changes are needed.
Strategy #2: Compare Network Providers
Switching to in-network providers can make a big difference in cost savings without sacrificing care quality. Out-of-network charges often come with higher rates, adding unnecessary expenses to the overall plan.
Evaluating the adequacy of the provider network helps it meet employee needs while balancing affordability. Essential health benefits, established by the ACA, evaluate the adequacy of provider networks and ensure comprehensive coverage.Â
If gaps in access exist, it might be worth negotiating a broader network with the insurer.
Strategy #3: Evaluate Prescription Drug Plans
Prescription drug costs often present significant savings opportunities. Employers can identify cost-effective alternatives by reviewing formularies, like generic substitutions or mail-order options.
Reviewing and managing prescription costs also reduces overall medical bills for employees. For instance, switching high-cost brand-name drugs to equally effective generics can save thousands annually.
Strategy #4: Leverage Employee Wellness Programs and Health Savings Accounts
Wellness programs aren’t just a feel-good initiative 一 they drive measurable cost savings over time. Programs that encourage healthy habits, such as smoking cessation or weight management, also reduce the risk of expensive medical claims.
Promoting these benefits through incentives, like reduced premiums or rewards, may boost participation rates while fostering a healthier workforce.
Strategy #5: Negotiate with Carriers on Cost Sharing
Rates and terms with insurance carriers aren’t set in stone. Brokers can help you regularly revisit contracts to push for better deals based on market trends or employee usage data.
Negotiating lower premiums, better network access, or improved coverage terms can significantly reduce costs without compromising plan quality. A broker’s persistence and market knowledge are foundational to successful negotiations.
Strategy #6: Audit Plan Fees
High administrative fees and hidden broker charges can drain resources unnecessarily. That’s why brokers conduct regular audits to identify and eliminate excessive costs embedded in the plan.
Understanding and managing various cost-sharing features, such as deductibles and copayments, helps identify and eliminate excessive costs. Other cost-sharing measures, like those found in HMOs and PPOs, can significantly impact enrollees’ overall expenses and access to care.
Brokers look for discrepancies in administrative charges and benchmark fees against industry standards to determine whether they’re fair. Even small fee reductions can add up to substantial savings over time.
Strategy #7: Encourage Preventative Care
Promoting preventative care is a long-term strategy that pays off in lower claims and healthier employees. Services like vaccinations, screenings, and wellness checkups can prevent costly health issues before they arise (impacting your workers and your business).
Encouraging preventative care can help reduce out-of-pocket costs for employees by preventing expensive medical issues. Encourage employees to take advantage of these benefits and foster a culture of proactive health management to benefit everyone.
Benefits of Identifying Ways to Save on Health Plans
The immediate advantage of finding cost-saving opportunities in health plans is clear: you save money upfront. This can mean significant annual savings for businesses, which can be reinvested in other priorities.
Lower healthcare costs also reduce financial stress for employees, enabling them to focus more on their work and less on their wallets. Additionally, premium tax credits can provide significant financial assistance and impact overall cost savings for businesses and employees.
For example: A study by The Commonwealth Fund found that wasteful prescriptions represented 3% to 12% of total claims per plan sponsor, with an average savings of $413 per wasteful prescription. Specialty drugs, though only 0.1% of wasteful prescriptions, generated an average savings of $2,221 per wasteful specialty prescription.
But the benefits go beyond finances. When businesses actively optimize health plans, they build trust with employees. Workers feel valued knowing their employer is trying to reduce costs without sacrificing quality care.Â
In short, businesses that partner with experienced brokers set themselves up for ongoing success and stability by prioritizing cost-saving, supportive strategies.
How Terri Yurek Insurance Helps
Finding cost-saving opportunities in health plans doesn’t have to be a guessing game. With a great partner, you can uncover hidden savings, reduce unnecessary expenses, and design a plan that works for your team.
Backed by years of experience, Terri Yurek and her team specialize in helping businesses identify and address inefficiencies in their health plans. From analyzing plan utilization data to negotiating with carriers, we offer strategies to maximize your budget and improve employee satisfaction.
Unlock Customized Insurance Solutions for Your Business
Every dollar counts, and working with an experienced broker ensures you’re making the most of your investment.
Ready to take the first step? Schedule a consultation with Terri Yurek Insurance and start building a plan that saves you money – without compromising quality. Contact us now!