Healthcare is one of your greatest expenses: How you can actually save money on it Skip to content

Healthcare is one of your greatest expenses: How you can actually save money on it

As a business leader you are constantly looking for a competitive advantage wherever you can. Through improved efficiency or cost savings, the opportunities to get an edge over the competition are abundant for those who know where to look.


One area that many employers struggle with are the rising costs of healthcare within their organizations. According to the Bureau of Labor Statistics, healthcare costs are the 2nd highest cost for employers. Is it possible to actually save money in a rising cost environment? The short answer is yes.


Why are costs rising?

By understanding the why, you can be better prepared with the how.

Inflation aside, a reason premiums rise is because of claims. The more claims the insurance company has to pay out due to hospitalization, surgery or other expense, the more premiums increase for you and your employees.

For you to help lower the premiums you pay on behalf of your workforce, you need to manage claims by reducing claims. How is this done? We will go over a few strategies that you can consider using to control one of the largest costs to your business.


Shift in mindset

If you offer healthcare for your employees you are in the healthcare business. The idea that your organization, no matter the industry, is in the healthcare business is a shift in mindset for many employers. But when you look at your company financials and the one of the top expenditures is healthcare, there's really no other way to look at it.

Once you shift that paradigm, then you can start making the necessary steps to controlling expenses just like you would for things like inventory or marketing.


Understand your costs

The sickest 6% of employees of an employer's population represents 47% of the total allowed medical and pharmacy spending1. Which means a small percentage of your employees could be driving a large proportion of the costs of healthcare within your business.

To adequately control one of the largest costs within your business, you must understand who, or more specifically, what, you are insuring. Ask yourself the following:


  • What does the overall health picture look like in your organization?
  • Do you have employees with chronic illnesses or high hospitalization rates?


Depending upon the size of your company, the answer is probably yes. If you don't know, that could be a solution to help determine which employees are at risk or are a potential risk for health issues. Screenings and diagnostic tests for all employees can give the data needed to gain an understanding of the current health of your employees.

Once employee data is collected, employers can put in place an action plan that includes a comprehensive wellness plan and preventive care to help keep employees healthy and mitigate healthcare costs increases down the road.


Motivation through HSA contributions

Best in class employers mandate health screenings every year. That may sound authoritative, but it is actually a good benefit for employees to know where they stand on their individual health continuum.

Many employers use incentives like additional HSA contributions to get their workforce to complete diagnostic tests and screenings. This can be a great benefit to employees due to its tax advantages2 and the fact that those funds are theirs to spend on qualified medical expenses.



Employers that understand that healthcare is one of the largest expenses in their organizations have a leg up in the game. This mindset allows employers to view these expenses in the right context and then manage them accordingly, like they would any other expenditures. Managing from this sphere allows employers to not have sticker shock every year during open enrollment. Costs can be managed and risks can be mitigated, but it starts with you.

To learn more about HSAs, go to

1According to Mercer's database of about 1.6 million plan members.

2HSAs are never taxed at a federal income tax level when used appropriately for qualified medical expenses. Also, most states recognize HSA funds as tax-free with very few exceptions. Please consult a tax advisor regarding your state's specific rules.

HealthEquity does not provide legal, tax, financial or medical advice. Always consult a professional when making life changing decisions.


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