EMPLOYEE BENEFITS
Balancing Benefits & Budgets: How Smart Strategies Drive Employee Financial Security
A proactive benefits strategy lowers healthcare costs and boosts employee retention.
Employers today face a delicate balancing act: managing the third consecutive year of healthcare costs rising 5% or more while trying to keep employees happy and engaged with their health plans.
A recent survey found that more than half of employers plan to make cost-cutting changes to their plans in 2025, but the issue is much more complex than dollars on a balance sheet.
How One Business Owner Discovered the Cost of a Flawed Strategy
A few years ago, I met a frustrated business owner, Sam, who was struggling to keep employees happy while losing profit. His industry was competitive, and he kept losing top talent to better-equipped companies.
Through our conversation, I discovered he had only recently started offering health insurance—mainly to meet compliance requirements and support a few key employees with medical needs. However, only 14% of his workforce enrolled, as the premiums were high and the company's contribution was minimal due to budget constraints.
To make matters worse, his renewal rates were skyrocketing, putting his ability to contribute at risk. Losing employees meant losing clients, further damaging his finances. Sam's benefits strategy was broken, and he couldn't understand how his competitors were thriving while he struggled to stay afloat.
This story isn't unique to Sam or his company, as most companies we work with are faced with the same financial challenges and hard decisions when it comes to their workforce and where to put the dollars. I take my hat off to all business owners or executives reading this, both large and small.
Breaking the Cycle of Rising Costs and Employee Turnover
It's logical to assume that higher employer contributions lead to more employee enrollments, increasing company costs. However, "insurance math" works differently.
Factors like claims history, risk distribution, claim severity, and ongoing vs. one-time claims all impact costs. Simply put, a plan dominated by sick employees drives up renewal rates. To keep costs manageable, businesses need a balanced mix of healthy and low-utilization employees. More participants help stabilize rates and improve affordability.
What does this look like in the real world?
Sam contributed the bare minimum to employee premiums, so most employees waived coverage—except those with high medical needs. Healthy employees opted out, thinking they didn't need it. This imbalance led to massive, unaffordable premium hikes year after year, creating a financial strain on his business. Without realizing it, Sam was caught in a cycle that was driving up costs and hurting retention.
After much hesitation, he finally decided to try a new approach and increased his contributions. He was convinced enrollment wouldn't change, but to his surprise, 91% of employees signed up. While his initial costs rose, the long-term impact transformed his business. Employee retention improved, allowing him to take on more clients and significantly increase revenue. He could finally recruit top talent again, and over time, even his insurance renewals began to stabilize.
How Employers and Employees Can Work Together to Foster Financial and Physical Wellness
A well-structured benefits strategy goes beyond just offering coverage—it empowers employees to take charge of their health. When employees have access to preventive care, they can catch potential health issues early and make lifestyle changes before major medical claims arise, ultimately reducing long-term costs for both the company and the workforce.
Actionable Steps for Employers:
- Encourage Preventive Care: Provide wellness incentives, schedule annual screenings, and promote proactive health management.
- Educate on Cost-Saving Care Options: Offer clear guidance on when to use telehealth, urgent care, or the emergency room.
- Provide Easy-to-Access Resources: Create quick-reference guides or digital tools to help employees navigate their benefits.
- Reinforce Through Ongoing Communication: Use emails, workshops, and HR meetings to keep healthcare education top of mind.
Own Your Health Like You Own Your Life
With rising healthcare costs, businesses must balance affordability with meaningful coverage. By promoting preventive care, educating employees on cost-effective healthcare choices, and encouraging smarter utilization, companies can lower long-term costs while improving retention and engagement.
When employers and employees collaborate on healthcare decisions, the result is a healthier workforce, greater financial stability, and a stronger business overall.
If you have questions or want to discuss your organization’s benefit plan, contact me at nicole.thurman@thinkccig.com. We specialize in designing and building plans that fit your team’s needs and set your employees and your company up for success.