Health insurance. It’s confusing, it’s expensive, yet it’s a necessity for Americans. Medical debt is ranked as the #1 cause of bankruptcy in the U.S. – and most medical debt bankruptcies are filed by individuals who did have insurance. So what gives? Rising healthcare costs are not sustainable for anyone – not employers, not employees.
The Inflation Reduction Act (IRA) showed us firsthand the priority our government is placing on reducing healthcare costs for Americans. Whether it’s protecting Medicare recipients from catastrophic drug costs, or extending health insurance premium subsidies for those who benefit from the Affordable Care Act, the lowered healthcare costs from the IRA will prove to be a tremendous step forward in providing affordable coverage for all. But there’s another way for corporations to provide high-quality, more affordable healthcare for their employees – and it just takes cutting costs and making the change.
During Open Enrollment every November, consumers are often forced to pick the best of a myriad of bad options for their healthcare coverage, which can come with a ridiculously high price tag. This lose-lose situation is often linked to their employer offering a traditional group plan where all employees within a company are put on the same health insurance plan. This does more harm than good by driving up costs for both the employer and the employee. Even further, the 2022 National Health Benefits Analysis found that when employees are given the choice between an individual plan or a group plan, 60% selected individual plans for their health coverage. So why do employers keep coming back to a traditional group offering?
A traditional group plan is a model many are accustomed to signing up for during Open Enrollment or whenever they change jobs. This model allows employees to pay into the same plan that everyone else is on and participate in it, which seems simple and easy for employers to manage, right? The catch is that group health plan costs have dramatically increased over the past 20 years. Additionally, deductibles, in some cases, have doubled. Simply put, this is a ton of money consumers are paying out-of-pocket before their insurance company will start covering medical expenses. When it comes to group health insurance plans, there are some traditions that are better left on the cutting room floor.
Individual Plans Offer Savings
Individual health plans are often referred to as Affordable Care Act, Marketplace and Exchange Plans and are model insurance options designed to meet the individual needs of whomever is purchasing that plan. This coverage operates like normal health insurance, but instead of it being part of an expensive group plan, it’s intended for individuals. Because these plans are more tailored to a specific person rather than a group, the cost for both the employer and employee is often much more affordable and more attractive to both parties.
This move from a traditional group plan to an individual plan is known to generate massive savings. On average, consumers will pay half of what they would’ve paid for traditional group benefits. For some employers, this understated move is saving them up to 50% in benefits costs through these customized individual plans. Because one size doesn’t fit all, this option also empowers the consumer to take control of their healthcare costs and choose a plan that is best fit to meet their needs. Recent data even shows 79.5% of all individuals are eligible for tax credits and subsidies from individual plans, which on average lowers their individual premium by $8,948 a year. Over the past few years, the average monthly cost for employees on individual plans has trended downward while those on traditional group plans have continued to rise.
With so many employers being pressured to attract employees amid a nationwide worker shortage, helping employees find coverage that works best for them and their budgets with individual plans have never been more important.
Making the Switch
Employers who switch to individual plans over group plans get better health coverage at a much lower cost for them and their employees. When an employee is able to examine their options and pick out a customized, individual plan that fits their medical needs, the consumer becomes the decision maker – giving them the power to make healthcare choices that are right for their individual needs, not for someone else on the team.
Healthcare costs will always remain a hot-button issue. But cheaper plans don’t mean cheaper quality. On an individual health plan, employees autonomously take control of their own medical needs, without breaking the bank or sacrificing on service. If your company is looking to cut costs, look no further.
John Staub serves as Director of Outreach for Remodel Health, an HR service used by universities and colleges across the country that provides innovative health benefits solutions to employers and employees alike. As a national thought leader and expert in the health benefits field, John brings passion and knowledge to the benefits industry.