Retailers' Guide to Navigating Rising Healthcare Costs
Healthcare costs are on the rise. This has a particularly big impact on the retail industry, as it's comprised primarily of an hourly workforce with limited options when it comes to obtaining affordable healthcare coverage. This presents retail HR executives with an obstacle to cultivating and retaining a healthy, productive group of employees. While employee physical and financial wellness can directly impact a retail organization’s bottom line, few businesses have found a successful path to offering comprehensive healthcare benefits to a mostly hourly workforce. Innovative companies are broadening their view of benefits and increasing their focus on employee education to help address this gap.
The stakes are high. The connection between increased consumer healthcare costs, employee financial wellness and physical health has been a trending industry topic of late — and for good reason. Workforce productivity, employee retention and overall employee satisfaction have direct impact on the retail experience of consumers and, therefore, on the retailer’s overall success.
The majority of the U.S. population is feeling the effect of this established progression of increased out-of-pocket expenses. In fact, 57 percent of Americans don’t have enough cash to cover a $500 unexpected expense, per a recent survey from Bankrate, and 55 percent of consumers report spending more than $1,000 in out-of-pocket health expenses per year, according to a recent consumer survey by Copatient. These facts point to a situation where increased costs of healthcare are particularly challenging for hourly retail workforces without full medical benefits.
For those working part time in retail, there are minimal affordable healthcare options. What’s more, the possible repeal of the Affordable Care Act (ACA, aka “Obamacare”) by the new administration will make it more difficult for part-time retail employees to be eligible for affordable healthcare. At the same time, evidence shows that most part-time employees choose not to opt in for health insurance. The ACA’s employer mandate — which will remain in effect until its unknown repeal date – requires employers with more than 50 full-time workers to offer most of their employees insurance or face financial penalties. Even still, many employees are choosing to opt out of their employer’s health insurance.
The main reason? It’s still not affordable. Even plans being offered to workers as “affordable options” are a reach for most retail and other low-wage employees. It’s a major issue and it’s something corporate, management, part-time and full-time employees within the retail space should be educated on.
Of course, many questions remain around the timing and extent of ACA repeal, and the repercussions it may have on both employers and employees.
Uncertainty Abounds
While nothing is set in stone yet, President Trump continues to reiterate his commitment to repealing and replacing the ACA (House Republicans passed a bill to repeal and replace ObamaCare. It will head to the Senate next). It's expected that employers will no longer be required to offer coverage after repeal. However, they'll still likely need to comply with many remaining ACA provisions, regardless of whether they provide health coverage or not. With this change, employers’ direct healthcare costs will likely decline. That said, different compliance regulations may make it more difficult to provide a sound solution to employees, and may constitute a threat to employee retention and the health of your workforce should the high cost of care discourage people from seeking it.
One example includes the “Better Way” tax reform plan that will tax a portion of employer-provided health benefits as income, which will likely lead to pressure on employers to raise wages to compensate and encourage workers to leave their employers’ health plans and obtain their own individual plans. While this seems as if it will benefit both parties, employer wage costs will likely increase along with employees’ personal healthcare expenses. Therefore, to help an employee afford healthcare the wage increase must be significant enough to cover the loss of coverage.
With all this in motion, the tax implications this may have for businesses is uncertain as it all depends on how the bill will be structured. So far, there hasn't been any implications about this provision in the AHCA Bill, which is now the vehicle for healthcare discussion. That said, it may be part of the tax reform. If healthcare benefits become taxable, it increases other business obligations like Social Security, so taxing this non-cash benefit would have an impact on both individuals and employers.
Today, organizations like the National Retail Federation (NRF) are spearheading mandates to make the ACA repeal and replace as employer-friendly as possible, and to oppose taxation of health benefits. The NRF works closely with Congress to minimize the burdens imposed by different mandates so that retail organizations can manage healthcare costs efficiently while still being able to help their employees with their medical needs.
With constant regulatory changes, employers need to ensure they're up-to-date on how the latest mandates will, and are, affecting their business and employees’ benefit options. This will help maintain the success of your business by keeping your employees happy and updated on all things related to managing the financial aspects of their healthcare.
Best Practices to Prepare Your Staff
There are educational tools your employees and you, as the employer, can use to help strategically navigate healthcare expenses. Given the complexity surrounding healthcare today, education will be key to ensuring employees are satisfied with their medical benefits, even if they're limited or nontraditional in design. Ideally, employers should engage their employees throughout the year to help them understand their benefit options and, perhaps more importantly, educate them on how to make the most of them. For example, employers can promote employee financial wellness by facilitating the management of medical expenses and empowering employees to anticipate and plan for these growing costs.
While the answer is never black and white, I've learned a few things throughout my career within the health financial space that have helped in understanding today’s perplexing healthcare landscape:
- Evaluate the benefits you offer by their impact: Supplement traditional compensation benefits with financial health and wellness benefits to maximize their impact. Or, when full benefits coverage isn't viable, explore offering access to tools that will create value for your employees, such as resources that will promote financial wellness or educational programs that will empower employees to more effectively navigate healthcare decisions. Combine these more modern benefits with physical wellness incentives like smoking cessation programs or discounted gym memberships to help support the overall health of your team.
- Leave behind the “one size fits all approach”: It’s dated and probably won't be effective. Different groups of employees may require different policy responses, and leaders should expect that no program will be universally successful or appreciated.
- Be proactive: Most people are hesitant to talk about their finances, particularly when they have problems, and they may not seek help until a situation becomes difficult to manage. Employers should be proactive with communicating with their employees rather than waiting until employees identify problems.
- Utilize untapped benefits: Don’t be afraid to work with third-party experts who can assist with healthcare finance management. For example, companies like Copatient offer employers solutions to contain healthcare costs through post-adjudicated claim review, appeal and re-pricing. Seventy-eight percent of consumer respondents to Copatient’s survey said if their employer offered a benefit to help manage medical bills and control healthcare costs, they would utilize it.
- Provide your employee with options: While health insurance may not be available or viable for all employers to offer their retail employees, identifying different options that can help them get on the right track for financial wellness and health is important. This can be as simple as holding a staff meeting to go over the different healthcare options available to them, or having an expert come in to help them plan for managing medical expenses.
The biggest piece of advice is to keep up with what’s happening with government mandates and what’s next for healthcare, as it could have a major impact on your business and employees. Building a culture that promotes engagement and education around benefits will be valuable in both the short and long term, especially as healthcare continues to evolve. You'll see the benefit of healthier and more productive employees now and your demonstrated interest in the health and wellness of your team will positively influence retention rates in the future. Simply put, the most effective employees tend to be those who are happy and healthy, and it's in your best interest to keep them on your team and on your retail floor.
Thomas Torre is the CEO of Copatient, a company that reviews medical and hospital bills for billing errors and provides correction, negotiation and resolution services for consumers and healthcare providers.
