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Strategies for Reducing Health Benefits Costs in 2022

Strategies for Reducing Health Benefits Costs in 2022

3.5 minute read

Health costs have increased steadily year after year. PricewaterhouseCoopers (PwC) reports that medical costs are projected to increase 6.5% in 2022. So, it’s no surprise that employers must think strategically and creatively about how they can lower their health benefits expense in 2022. Here are some ways to help reduce spending without compromising benefits quality.


Encourage Active Benefits Participation

Employers can help limit overall health costs by making employees active participants in their own health care. This means encouraging employees to price shop, research treatments, and improve their health literacy.


Control Drug Spending

Drug prices are rising faster than any other medical service. According to GoodRx, prices are now 33% higher than they were in 2014.

Employers can educate employees on the price differences between name brand and generic medication. This can help employees understand that they can save money while still receiving the same quality treatment. Employers may also consider introducing varying levels of prescription drug coverage. An employer may fully cover prescriptions for chronic conditions but may cover less costs for specialty drugs.


Virtual Health Options

Many virtual health options gained popularity during the pandemic. Individuals can connect virtually with health professionals in just a few clicks – no waiting times or driving to a clinic. Additionally, individuals didn’t need to take time off work, allowing for greater productivity. And some telehealth solutions are less expensive than a typical in-person doctor visit. Employers may want to consider adding telehealth services into their plan design because they expand access to care and lower expenses for everyone.


Offer Savings Accounts with Carryovers

Many employers are offering health plans with savings components. These tax-advantaged savings accounts encourage employees to take control of their own spending and improve their health literacy. This includes Health Savings Accounts (HSA), Health Reimbursement Accounts (HRA), and Flexible Spending Accounts (FSA). Some accounts allow for carryover funds, which encourages employees to put more money in. More money added to these accounts means greater tax savings for all.


Consider Plan Funding Alternatives

One more drastic option for reducing health costs is restructuring how plans are funded. A self-funded plan may be more cost-effective than paying a monthly premium on a fully insured plan. There are other options including level-funding or reference-based pricing models.

Funding decisions should not be taken lightly and should be based upon several factors including risk tolerance, organization size, and financial stability.

In light of the pandemic, this trend is not expected to be widespread in 2022, due to the tight labor market and how many people are struggling financially. Employers will be hesitant to shift too much of the burden onto employees.



Employers have a variety of options when it comes to helping contain health care expenses. They must choose the right method for them based upon their unique employee populations and budgets.

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This blog is intended to be a compilation of information and resources pulled from federal, state, and local agencies. This is not intended to be legal advice. For up to the minute information and guidance on COVID-19, please follow the guidelines of the Centers for Disease Control and Prevention (CDC) and your local health organizations.

National Insurance Services is not a law firm and no opinion, suggestion, or recommendation of the firm or its employees shall constitute legal advice. Readers are advised to consult with their own attorney for a determination of their legal rights, responsibilities and liabilities, including the interpretation of any statute or regulation, or its application to the readers’ business activities.

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Steve Smith

Steve Smith

Steve Smith, Employee Benefits Consultant for National Insurance Services, has his energy level permanently set at “high.” His maxim is “work hard, play hard.” Steve’s an expert in getting groups of people working together for a higher cause. Minnesota schools, cities, and counties rely on Steve’s unique and creative ideas of engaging employees in their own health and wellness to lower utilization trends. He has 20+ years in the health insurance field doing compliance, cost mitigation, utilization, analytics, wellness plans, and strategic planning. Steve is a licensed insurance agent and holds the designations for Managed Healthcare Professional (The Health Insurance Association of America), Certified Patient Protection and Affordable Care Act Professional (National Association of Health Underwriters), and Group Benefits Disability Specialist (Hartford School of Insurance). He specializes in Employee Benefits Consulting for Minnesota schools, cities, and counties including fully insured, self-insured, and stop-loss plans.