Top Five Cost-Control Strategies

Wellness initiatives - Wellness initiatives were among the top cost-control strategies implemented by employers in a recent survey of government financial officers. Nearly 80 percent of survey respondents have added wellness initiatives to their benefits program, and 90 percent of those recommend them to others; nearly two-thirds recommend them strongly. That aligns with a Society for Human Resource Management report showing 75 percent of employers supply their workforce with wellness resources and information.

Pretaxing benefits/Section 125 participation - Equaling wellness programs as a highly implemented and recommended cost-control strategy is establishing Section 125 plans and maximizing employees' participation in pretax benefits programs. More than three quarters - 77 percent - of employers in the government financial officers survey say they offer pretax benefit plans, and 86 percent of those recommend this option. In fact, at 73 percent highly recommended, it was the most enthusiastically endorsed strategy of the survey options, and only 3 percent were unlikely to recommend it.

Benefits communication and education - Employers can transfer the cost of benefits plan communication to their benefits suppliers and can outsource an enrollment system and open enrollment management rather than maintaining these responsibilities in-house. Although this shift in benefits communication and enrollment responsibilities is well-recommended by those using it, it's not yet widely implemented. In the government financial officers survey, only 31 percent of employers were using an external service provider for benefits enrollment and 52 percent had shifted benefits education and communication expense to suppliers. However, 78 percent of those who outsourced enrollment would recommend it, and 84 percent recommended using a benefits carrier to handle benefits education and communication.

Voluntary benefits - One underutilized solution to the benefits cost problem is to move noncore benefits to employee-paid voluntary benefits. This strategy is another example of a change that fewer public sector employers have yet to implement, but those who do give it very high marks. Only about a third of employers in the government financial officers study said they have moved noncore benefits to employee-paid voluntary coverage. However, 87 percent of those employers recommended this strategy, and 70 percent recommended it strongly.

Dependent verification - Providing insurance coverage for dependents who are no longer eligible drives up benefits costs for employers. Health plan audits can reveal a significant number of ineligible participants, including dependents who are over age or who aren't a blood relative or a spouse, or former employees who haven't been removed from the plan. The potential cost savings offered by dependent verification can be considerable, and the service is sometimes available at no cost to the employer.

Dollars and Sense

Government employers who implemented strategies such as these report significant savings in their employee health care benefits. More than half - 55 percent - of participants in the government financial officers study saved at least 6 percent, and 40 percent of them saved more than 10 percent. Other studies show employer return on investment for wellness initiatives ranging from $3 to $6 for every dollar spent.