‘Tis the Season for Rising Health Care Costs – Managing Total Compensation Changes


While everyone is out doing their holiday shopping and headed for parties, there’s an undercurrent of change coming that will affect nearly every American in 2016. Wages are up according to the most recent PayScale Wage Index findings, but these wages are going to have to be stretched even further because of rising health care costs. How will employers manage their total compensation strategy for the coming year in order to remain competitive?

Not Surprising…Health Care Costs on the Rise

A Kaiser Family Foundation survey reported that employer-sponsored insurance premiums climbed steadily in 2015 as expected due to the increased demand for health care plans with the Affordable Care Act. Another report from Mercer advises much of the same – an expected increase in plan costs for 2016. Much of the increase in premiums stems from a growing number of younger employees in the workforce who demand flexible benefit plans.

However, the Society for Human Resources Management advised that benefit costs have gone up due to an uptick in medical claims costs. Employers are doing their best to provide more health care options, while juggling ACA required minimums, but they are shifting more of these costs to employees.

Communicating Changes to Total Compensation

In 2016, it will become more important than ever for employers to communicate the value of benefit and salary packages through active total comp campaigns aimed at recruitment and retention efforts. Some ways to accomplish can this include:

  • Providing on-demand total compensation statements that show comp data, salary, and all company perks in real time (instead of once a year reports).
  • Communicating with visuals to show how plan premiums may impact total compensation, but emphasize the additional “invisible” perks they get too.
  • Connecting additional compensation to performance metrics so that hard working employees see the results of their efforts.
  • Increasing transparency around salary data to leverage as a selling point during recruitment efforts.
  • Encouraging employees to explore all their benefit options in states where there is a marketplace for comparing plan costs.

Organizations can also take the stance of educating employees about the responsible use of their benefit plans and their salaries, to make their health care dollars work for them. For example, offering a high deductible health care plan with lower monthly premiums combined with a health savings account can be a solution for annual deductible management. Creating bonus programs for employees who use their sick time appropriately and protect the health of the workplace could be another option. In order to remain competitive, companies need to look at ways to boost salaries and offer low cost flexible benefit offerings.

We want to hear from you!

How is your organization managing the rising costs of health care through a smart total compensation strategy? Please post your comments below.


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