While most industry professionals would agree the COVID-19 pandemic will impact health insurance premiums, few have a grasp yet on just how significant any increase will be. Until we know more, one question employers might want to consider thinking about is whether they should pass any increase on to employees.
Although many employers have traditionally passed on parts or all of an annual premium increase to employees in the past, doing so at this time might not be a good strategy. Although bearing the extra cost for healthcare insurance might place extra weight on the employer’s bottom line in the near term, by looking at the long-term picture, there might be some solid reasons to avoid doing so. Here are a few points to consider:
- Although many employers have been impacted significantly by the COVID-19 crisis, many employees have suffered even more. In addition to the strain on their personal finances, some have also felt the pandemic’s effects quite emotionally through illness and deaths of those they love.
- Higher health insurance costs or increased deductibles and copays, especially during this time when their financial situation may already be compromised could lead employees and their covered dependents to skip preventive healthcare or necessary medical procedures. This in turn can have significant impacts on the employer, both in terms of productivity loss and higher healthcare costs down the road if and when any untreated medical conditions worsen.
- Many contemporary studies show that employee well-being is more likely when workers are engaged in a pro-healthcare office environment. Passing on increases or raising cost-sharing through copays and deductibles can sabotage the level of employee engagement and can lead to a reduced level of employee happiness and greater employee absenteeism and turnover, all of which can impact the employer’s bottom line.
Most employees will be very appreciative that their employers chose to treat them well during this time when they struggled financially. Employers should consider the benefits, increased employee productivity, enhanced loyalty and improved morale before deciding on whether they should pass on any COVID related increases to their workforce.
My Benefit Advisor (MBA) guides employers of all sizes through planning, communicating, and managing a successful employee benefits program. We are ready to help you find the solution that fits your needs, from group insurance to individual coverage. For more information about MBA, contact us.