Elite Financial Services is one of the Companies which is committed towards cutting health costs in every aspect of their operation. If something is not done, there is a probability that the 275 employees in the Company will lose their health benefits. In order for this to be avoided, the director of compensation Albert Johnson will have to take the necessary precautionary measures to prevent this from occurring. First of all, he will be begin by determining all the factors likely to have a significant impact on the financial stability of the Company. For instance, the existent insurance plan comprising of Co-insurance and deductibles are generally low. In addition to this, the premiums being paid by the Company on behalf of its workers (90%) is very high. Besides, the idea that the workers contribute only 10% to the premium further exacerbates the situation.
It is apparent that unlike other Companies the formerly mentioned insurance package has enabled the Company to maintain financial planners. Albert is, nonetheless, supposed to consider the general impact this is capable of having on the Company. The idea that other related Companies are seeking to reduce the costs pertaining to healthcare within their organizations should show Albert that making such changes would not have dreadful consequences. It is, nevertheless, important to note that two of the greatest concerns in Elite Company is the high usage rates for the benefits and at the low cost-sharing between the entity and its employees. Based, on information from the Bureau of Labor it is apparent that by March 2018 this year, the health insurance benefits for workers accounted only 7.5% of the total compensation paid out to workers which shows that the Companies a significantly favorable amount to spend on their employees (U.S. Bureau of Labor Statistics, 2018). The Company stands to gain from health insurance benefits since it helps to reduce cases of absenteeism besides ascertaining that all employees are healthy, in addition to retention of workers.
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To rectify the situation currently being experienced Albert can begin by increasing out of pocket cost. The owners of the business will have to pay for the policy before it begins to cover expenses incurred by the policy holders. Secondly, he should focus on establishing a consumer driven healthcare. This will ensure that the Company is in a position to control insurance cost. Besides, he should ensure that the benefits are overused by checking on the formula established in the plans; such as the idea whether it is a defined contributions or benefit scheme. The third recommendation involves the idea of adopting Tele-health. It enables the administration to monitor long-distance clinical healthcare (Martocchio, 2015). This would ensure that the Company is in a position to minimize on the overuse of the benefits. For example, one would be expected to seek a pre-admission certificate from a registered medical Practitioner of Elite Company`s insurer before accessing non-emergency services.
To further belabor on the above, it is highly recommended for Elite Company to perform a risk analysis. This would entail the incorporation of mitigation techniques to cater for severance agreements where violation is likely to occur in order to cater for the pending cuts. A fifth recommendation would involve the adoption of tiered deductibles if they are available. It would enable the Company since the employees can utilize lower tiers based on the cost of insurance (Martocchio, 2015). For example, Tier 3 has the greatest costs compared to tier 1 which has the lowest. Also, Albert is supposed to re-evaluate the pharmaceutical plans. It is apparent that the growth rate of pharmaceuticals is increasing at a fast rate compared to the consumer price index (Martocchio, 2015). The drug plans tiered by pharmaceuticals have to be re-evaluated to control the situation. Finally, he should work towards assisting the employee to balance their lives at work and also reduce health related stress in order for them to work more effectively thus leading the Company to cut on costs incurred.
References
Martocchio, J.J. (2015). Strategic Compensation: A human resource management approach (8 th
ed.). Upper Saddle River NJ: Prentice Hall.
United States Bureau of Labor Statistics. Discretionary Benefits . Retrieved on
July 25, 2018, from https://www.bls.gov/news.release/pdf/ecec.pdf
