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CASE STUDY

More Plan Choices Lead to Lower Costs

Small and middle market businesses often struggle with the rising cost of health insurance, but several strategies and plan designs can help them lower expenses without sacrificing quality coverage. 

Company profile:

A growing technology services company in the Dallas-Fort Worth area with 85 employees saw 8 – 12% annual premium increases. Their employees are a mix of young, healthy individuals and a few older employees with families. 

The challenge:

Premiums strained their budget. Some employees valued the PPO (Preferred Provider Organization) network, while others used only preventive care. Rising out-of-pocket costs reduced satisfaction. 

Objectives:

Reduce overall health insurance costs by at least 15% for the upcoming year. 

Maintain competitive benefits to attract and retain talent. 

Offer more flexible options for diverse employee needs. 

Increase employee engagement in health care decisions. 

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Strategies implemented

SGL Partners assisted this client by implementing a multi-pronged approach: 

  • Three-tiered medical plan offering: 

    • HDHP (High deductible health plan) with HSA (Health savings account): Lower premium plan plus a $500 employer HSA contribution, allowing employees to save pre-tax dollars for medical expenses. This option appealed most to younger, healthier employees. 
    • Limited network HMO (Health maintenance organization) option: Lower premiums and out-of-pocket costs for employees comfortable with a smaller network and required specialist referrals. 
    • PPO with cost-sharing:  Employees who wanted to keep the broad PPO network paid the premium difference between the PPO and the HDHP/HSA, lowering the company’s PPO costs without affecting coverage. 
  • Launched a wellness program with incentives for screenings, fitness challenges, and stress management workshops. Emphasized using no-cost preventive care benefits in all plans, with the goal of promoting healthier lifestyles that lead to fewer claims and lower costs. Telehealth services were actively promoted as a convenient, cost-effective option for non-emergency care. 
  • Hosted interactive open enrollment sessions to explain plan options, HSA benefits, and network navigation. Distributed clear comparison materials showing cost differences, and designated an HR “benefits guru” to answer questions and offer personalized guidance. 
  • Committed to annual plan reviews to stay proactive as market conditions and carrier offerings change, ensuring continued cost efficiency. 

Results (after 1 year):

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Lessons learned

One size does not fit all

Offering a variety of plan options (like HDHP/HSA and HMO) caters to diverse employee needs and financial situations. 

Education is crucial

Employees need clear, consistent communication to understand new plan designs and how to leverage cost-saving tools. 

Proactive approach

Regularly reviewing benefit plans helps them stay ahead of rising costs. 

Wellness pays off

Investing in employee well-being contributes to long-term cost savings by promoting healthier habits and reducing claims.

Broker partnership

A knowledgeable benefits broker can provide invaluable guidance and access to a wide range of options.

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