Nearly two-thirds (65%) of small and mid-sized employers believe they are doing all they can to rein in rising health benefits costs, a survey by Hub International Limited (HUB) finds.
Sixty-six percent are experiencing return on investment (ROI) on their health and performance initiatives, with 35% reporting improved productivity and 34% citing improved morale. However, key benchmarks for these initiatives which include employee turnover (21%), absenteeism (18%) and chronic disease management (16%) are lagging. Seventy percent report that their strategies are reigning in benefit costs.
More than half (51%) have implemented voluntary benefits as a cost containment strategy. However, HUB notes many are missing opportunities to leverage proven cost management strategies. Only 31% are using pharmacy carve out strategies that HUB says could save 20%. Only 18% are using self-funding, which could save 9%, and only 16% are using narrow networks, which HUB says could save 17%.
Only 58% of respondents ranked Patient Protection and Affordable Care Act (ACA) compliance as a top priority, despite 2016 being the first year of ACA reporting and Internal Revenue Service (IRS) audits. It ranked third behind employee wellness and productivity improvements (83%) as well as cost management (76%).
While ACA compliance was not the top priority, 64% of respondents said they would struggle to stay in business as a result of ACA compliance, with 57% concerned about the burden of calculating affordability and 45% concerned about calculating full-time employees and equivalents—key red flags for IRS audits.
Collaboration between HR and finance is critical, HUB says. The survey found 78% of Finance respondents consider HR a strategic partner, but Finance has significant concerns with benefits costs (97%), HR missteps with executive liability (93%) and ACA audits (88%). Even more indicative of the relationship is that one-third of Finance expects HR to go over budget (32%), mismanage ACA reporting (34%), and pay IRS audit penalties (35%).
More than 400 senior-level human resource and finance executives at U.S. companies with 50 to 1,000 employees were surveyed. The study report, “Employee Benefits Barometer: SMB Perspectives and Priorities in an Era of Disruption,” can be downloaded from here.