Strategies to Manage Rising Health Insurance Expenses

The cost of health insurance continues to rise, putting a strain on both individuals and businesses. According to initial results from Mercer’s 2024 National Survey of Employer-Sponsored Health Plans, the cost of total health benefits is expected to rise nearly 6% per employee for 2025. This makes 2025 the third year in a row in which health insurance costs increased more than 5% over the previous year. 

With healthcare costs rising every year, it's crucial for small businesses to find effective strategies to manage these expenses while also providing health insurance options that appeal to employees. It’s not easy, but Justworks is here to help you understand how to navigate the rising costs of small business health insurance.

Understanding Rising Healthcare Costs

The first step in managing health insurance expenses is understanding why costs are rising. Several factors contribute to this trend:

Increased Medical Costs

Medical advancements, while beneficial, often come with higher price tags. New treatments, medications, and technologies can significantly drive up the cost of healthcare services.

Aging Population

As the population ages, the demand for healthcare services increases. Older individuals typically require more medical attention, which contributes to rising healthcare costs.

Lifestyle-Related Health Issues

Chronic conditions like diabetes, heart disease, and obesity are becoming more common. These conditions require ongoing treatment and management, leading to higher health insurance premiums.

Strategies for Individuals

Mitigating ever-increasing health insurance costs is a joint effort between employers and employees alike. Even as premiums continue to increase, employees can minimize the expense to them by making wise decisions about the type of health plan and related benefits they select and focusing on staying healthy. 

Consider a High-Deductible Health Plans

A high deductible health plan (HDHP) often comes with lower monthly premiums than other types of health plans, making them an attractive option for many. This type of plan does require you to pay more out-of-pocket before the insurance kicks in, but pairing an HDHP with a Health Savings Account (HSA) can help you save for these expenses tax-free.

Utilize Preventive Care

Most health insurance plans cover preventive care services without requiring you to pay anything out of pocket, even if you haven’t yet met your deductible or usually have a copay. Taking advantage of preventive check-ups, screenings, and vaccinations can help catch health issues early, potentially saving you from more expensive treatments down the line.

Take Advantage of Wellness Programs

Many insurance plans or employers offer wellness programs that provide discounts or incentives for healthy behaviors, making it possible for you to boost your health while putting money in your pocket. Programs can include gym memberships, smoking cessation programs, discounts on health-related services, and financial incentives for participating in wellness initiatives.

Strategies for Employers

Employers can help manage the rising costs of health insurance, diversifying the types of plans they offer and helping employees navigate and utilize available options. 

Offer a Variety of Plan Options

Rather than offering just one plan, consider giving access to employees to choose from several offerings with widely varying premiums and coverage. Providing employees with multiple health plan options allows them to choose the one that best fits their needs and budget. This can lead to higher employee satisfaction and, potentially, lower overall costs.

Promote Telemedicine Services

Telemedicine can be a cost-effective alternative to traditional in-person visits in some situations. Making telemedicine available to employees for non-emergency health issues can help reduce costs for both the employer and the employees.

Implement Wellness Programs

Offering wellness programs in addition to health insurance can improve employee health and play a role in helping to reduce healthcare costs. It can be helpful to offer programs that focus on physical activity, nutrition, and stress management. After all, healthy employees are less likely to need expensive medical treatments, and they’re also likely to be more productive and have higher levels of job satisfaction. 

Educate Employees About Health Insurance

Many employees may not fully understand their health insurance options and benefits. Providing education designed to help employees understand how to choose the right plan, use preventive services, and manage healthcare expenses can empower them to make cost-effective decisions.

Applying Strategies to Manage Costs 

Rising health insurance expenses are a challenge, but with the right strategies, you can manage these costs effectively. Whether you're an individual looking for the best plan or an employer seeking to provide affordable options for your employees, the tips above can help you navigate the complex world of health insurance. By staying informed and proactive, you can make choices that benefit both your health and your wallet.

How Justworks Can Help

At Justworks, we’re committed to helping small businesses gain access to quality health insurance and other employee benefits that meet the needs of their team members. We provide access to a variety of small business health insurance plans and wellness perks for all budgets and can help you compare coverage options so you can find the best rate and coverage for your team. We also simplify benefits administration via our all-in-one tech solution.  

Ready to get started? Reach out today to find out how to offer benefits with Justworks and to seamlessly manage them, along with HR administration, payroll, and compliance, from our user-friendly platform