How to save money on corporate health insurance — 3 better alternatives for businesses

With the rising cost of healthcare, organisations are paying higher health insurance fees year by year. Singapore was ranked as the 4th most expensive country for health insurance, totalling USD 5,458 per employee in 2019. Compared to 2018, the fees increased by 9%, and it is expected to rise every year. On the other hand, Malaysia was ranked at 37th, paying USD 3,741, and the fees had increased by 8%. 

With this trend, organisations don't plan to sit still. They want to reduce the corporate health insurance costs but are not sure what the other alternatives are in the market. 

Before we get there, it is imperative to understand why insurance providers increase corporate health insurance costs every year. 

Imagine this.

Your corporate health insurance covers $1 million for your entire company. But last year, your company claimed $1.1 million. Your insurance provider, then, charges you with a higher fee this year. Why? Because they need to cover the additional claims you made last year. And this year, you could claim over $1 million as well, so they took precautions and raised the insurance fees.

Many people are unaware of this additional fee called "loading fee" charged by insurance providers. As a result, organisations are paying unnecessary healthcare fees every year. 

This is why the benefits specialists in Mednefits are committed to helping organisations provide better and more flexible employee benefits at a lower cost. 

This article will show you 3 alternatives you can consider to save money on corporate health insurance without sacrificing employee health needs.

Option 1: Switch to a lower insurance plan

You could be paying more than what your employees have utilised and weren't informed of it, except you have a system to keep track of your employees' benefits usage. What you can do here is switch to a lower insurance plan where it can still cover your employees' health needs and help you save costs at the same time. 

Here are 4 important questions to ask yourself before making the switch:‍

1. How much have my employees spent on benefits for the past 3 years?
2. How many employees spent over the budget?
3. How many employees spent below the budget?
4. Does the lower insurance plan cover my current employees' healthcare needs?

If the majority of your employees spent below the budget and the lower insurance plan still cover their needs, this option is a good alternative for you.

Pros: 

• Save money on low consumption employees—employees who claim less on medical fees.

Cons: 

• Pay extra for high consumption employees. 
• Requires thorough analysis of real-time health insurance usage to ensure the lower premium plan is enough for your employees

Who is this good for?

• This is good for companies with many low consumption employees (i.e., younger, healthier workers) and have accurate benefits data.

Option 2: Use a self-funded reimbursement

You can choose to reimburse your employee's healthcare fees from your own pocket, making your healthcare benefits a self-funded reimbursement. 

This is how it works:

1. The organisation needs to set an annual healthcare benefits budget per employee. Some organisations may limit this to only General Practitioner (GP) consultations, while others may include medicine & treatment, dental or vision. 
2. Communicate with your employees about what benefits they can claim under this budget. 
3. Employees need to pay for any benefit expenses first and then submit claims to their Human Resource (HR) person in charge. 
4. The HR person will review the benefits expenses claims, track and document, and reimburse the funds to the employees.

Pros:

• Pay as your employees claim; you will not pay more than necessary.
• Depending on your employee's usage, this may incur a lower cost than standard health plans, as the company policy will dictate a set benefits budget per employee

Cons:

• Creates a heavy administrative burden on HR and administrative staff. As the organisation grows, this is not a scalable approach.

Who is this for?

• This alternative to save money on corporate health insurance is generally more suitable for companies that want to retain stronger cash flow by avoiding lump sum payments. And companies with younger and relatively healthy employees.

Option 3: Change to a flexible pay-as-you-use benefits plan

As the name says, you'll pay for only what your employees have used. You can allocate an annual budget for your employees' healthcare fees on a customised benefits platform. 

It is quite similar to self-funded reimbursement but with a few added advantages: lower outpatient costs and an extra 10% benefits bonus. For instance, you budgeted $50,000 annually, and you'll receive an additional $5,000 - $10,000 (10 - 20%) as a bonus. Mednefits is currently the only platform in Asia with this service.

Pros:

• The pay-as-you-use plan allows you to save costs without paying more than necessary.
• Receive a 10 - 20% benefits bonus.
• Obtain real-time data on your employees' benefits usage.
• Employees use only a QR code to pay at clinics without using any cash or medical cards.

Cons:

• Doesn't include inpatient general hospitalisation and surgical health insurance (organisations need to purchase separately).

Who is this for?

• Companies looking for flexible options to cover younger and middle-aged employees' outpatient healthcare needs while saving on corporate health benefits cost.

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