The recently imposed U.S. tariffs dominating the news cycle are mostly focused on international trade, but there’s another affected area that isn’t being talked about as much— the impact on group health insurance. For small businesses in particular, there is a real trickle down effect stemming from the tariffs and the associated rising costs.
As operational expenses increase, many business owners find themselves evaluating tough financial decisions, but your team’s insurance benefits don’t have to be jeopardized. To help you understand these evolving changes, we’re here to help explain how tariffs may affect operational costs, and more importantly, what you can do to control expenses and keep offering your team quality care.
How Tariffs Effect the Budgets of Small Businesses
Since tariffs directly increase the cost of goods and materials sourced overseas, insurance costs are indirectly affected. This is largely due to the fact that prescription drugs, and medical supplies and equipment become more expensive, therefore raising the costs associated with seeking medical attention.
With all of this at play, small business owners are forced to reallocate funds in order to account for the added expenses. This likely means auditing all departments, projects and investments to protect the bottom line.
Instead of looking at group health insurance as an area to make cuts, company owners should instead view this time as an opportunity to optimize their offerings. A great place to start is by reviewing your current benefits package, looking at alternative plan options, and seeking out expert help. By doing this, you’ll be able to continue providing comprehensive coverage while dealing with the added financial pressures.
How to Keep Benefits Intact Despite Financial Concerns
Since small businesses generally don’t have the same negotiating power or budget that large corporations have, owners find themselves having to make tough choices. While the decision to cut certain expenses may be a no-brainer, employee healthcare is not one of them. When evaluating your team’s benefits, a better idea is to consider small, yet impactful changes.
Here are some applicable ways to tighten up your budget, while maintaining your employee group health insurance plan:
Consider Alternative Plans
More often than not, there are other health plans available that offer lower upfront costs, while still providing solid coverage. A great example of this is High Deductible Health Plans (HDHPs). These plans lower the monthly premium you pay, but still give employees comprehensive benefits. Additionally, HDHPs in particular are commonly paired with Health Savings Accounts (HSAs) to help employees with out-of-pocket costs. Switching to an HDHP with an HSA from a more common plan like a PPO, is a great way to tighten up your budget.
Other popular budget-friendly alternatives providing essential health benefits are ICHRAs (Individual Health Reimbursement Arrangements) and QSEHRAs (Qualified Small Employer Health Reimbursement Arrangements). These unique plans allow employees to receive tax-free reimbursements from their employers for out-of-pocket healthcare costs, and sometimes even premiums.
Adjust Premium Contributions
Another effective way to lower healthcare costs is by re-evaluating the percentage of employee premiums that you cover on a monthly basis. When opting to lower your premium contributions, it’s important to do it incrementally, rather than all at once. Additionally, be sure to be transparent with your team about the changes being made.
Focus on the Core Benefits
It’s important to continue to prioritize your team’s core health insurance plan, instead of drastically reducing benefits. With that being said, if you need to cut costs in the meantime, consider temporarily scaling back supplemental coverage options such as dental, vision and life insurance. If opting to do so, remember that this doesn’t have to be a permanent change, you can always bring them back when the company’s in a better financial position.
How to Navigate Rising Healthcare and Prescription Costs
As briefly mentioned earlier, tariffs tend to increase the costs of medical supplies and prescription drugs. In turn, this uptick may affect the overall cost of your group health plan. Luckily, there are some proactive steps you can take to stay ahead of these unforeseen price changes.
We recommend the following:
- Review Plan Pricing Regularly: In addition to exploring alternative plan options, its crucial to assess your plans pricing each year. Ask the professional you’re working with— are these increases simply due to industry trends, or is the impact stemming from how often your employees actually use their benefits. If it’s the latter, you may be able to make some budget-friendly plan optimizations.
- Explore Other Carrier Options: Just how businesses react to tariffs and inflation differently, so do insurance carriers. By using an insurance broker like Group-Health-Quotes.com to compare competing insurers, you may be able to find one that offers a better rate, and even better coverage.
- Promote Wellness Initiatives: Encourage your employees to schedule regular checkups, screenings and vaccinations, to stay ahead of preventable issues. Additionally, promoting an employee wellness program, helps employees stay healthy and avoid expensive claims.
- Encourage Generic Prescriptions and Use Formularies: Talk to your employees about the use of cost-effective, generic drugs that provide the same benefits as name-brands. Additionally, use a tiered formulary when structuring your plan’s drug benefits, so employees are more inclined to choose lower-cost medications.
- Work with a PBM: Working with a pharmacy benefit manager can help you bring costs down as they specialize in negotiating drug prices and managing formularies.
How to Offset Administrative and Compliance Costs
Since tariffs cause industries across the board to re-evaluate their practices, regulations tend to change, which could mean increased compliance and administrative costs.
Here are some steps you can take to stay on top of these backend expenses:
- Perform Audits of Plan Fees and Admin Costs: Work with an insurance professional to understand what you’re really paying for and why. While the costs at hand may all be standard, it’s possible that you’ll find potential changes that can be made to help free up funds.
- Ask Carriers About Tech Tools: Many insurers offer tools such as digital portals, virtual appointments and compliance resources, all of which can save your team time and money.
- Stay In Touch with a Broker for Ongoing Support: Talking with a licensed insurance broker or agent is the best way to stay on top of regulatory changes. Additionally, they’ll be the first one to know if there are options available to help you save.
Final Thoughts: Stay Informed, Stay Covered
While healthcare may not initially come to mind when thinking about the impact of the recently imposed tariffs, the effect is real and should not be ignored.
By comparing plan and carrier options, talking with insurance professionals, promoting cost-friendly prescriptions, and communicating with your team, you’ll be able to save money, without sacrificing your employees’ benefits. The key is to always be proactive, and not reactive, so you can stay ahead of the changing landscape without skipping a beat.
Group-Health-Quotes.com is here to help you with all of the above! Our user-friendly website makes it easy to get free, no-obligation quotes, compare top-rated plans, and find the best coverage for your employees, no matter what.
To get started, simply enter your ZIP code in the box on the right side of the screen or give us a call at (888)-571-0291.
