Managing rising healthcare costs has been a longstanding challenge for employers. After moderating during the pandemic, costs began accelerating again, and 2026 will see the highest projected increase in 15 years. The U.S. healthcare system is facing a perfect storm of higher prices, greater service utilization, and market consolidation.  It’s hitting employers hard and prompting many to adopt new approaches to benefits cost control and healthcare plan design. Proactive measures are essential to slowing the growth of costs while providing the robust, personalized plans necessary to compete for talent.  

What action can you take? Here are four strategies to consider for short- and long-term cost management.  

1.   Use tax-advantaged health accounts to complement qualified HDHPs 

A cornerstone of modern benefits cost control is the strategic use of a qualified High-Deductible Health Plans (HDHPs) paired with Health Savings Accounts (HSAs) or Health Reimbursement Arrangements (HRAs).   

These accounts offer a financial safety net that encourages employees to choose HDHPs, saving you money on higher premium traditional medical plans. Some organizations choose to use a portion of the savings to contribute to tax-advantaged health accounts. 

• HSAs are primarily employee funded, but employers may also contribute. These accounts belong to employees, are portable, and can be invested then rolled over year after year. There are triple tax advantages, with no taxes on contributions, growth, and withdrawals for qualified medical expenses.  

There are several benefits to the employers who contribute to HSAs. First, the contributions are tax-deductible to the organization and are exempt from Social Security, Medicare, and federal unemployment taxes. Second, they promote good will, as employees view employer contributions positively. 

• HRAs are another tool for cost management. Unlike HSAs, the employer funds HRA accounts and owns them. One hundred percent of these contributions are deductible as a business expense. Employees tap the accounts on a tax-free basis to reimburse themselves for HDHP deductibles, copays, and other qualified medical expenses.    

Not all HSAs and HRAs are compatible. If you’d like to offer both types of tax-advantaged accounts, consider combining an HSA with a Limited Purpose or Post-Deductible HRA. 

2. Offer voluntary benefits  

Supplemental policies—like accident, critical illness, and hospital indemnity insurance—are another low-cost way to expand coverage options tailored to the needs of employees. They are known as voluntary benefits because they are optional, not mandatory. Voluntary benefits are paid for by workers through payroll deduction and cost employers little to nothing.  

These policies pay cash for certain medical bills and living expenses that primary insurance doesn’t cover. By paying for deductibles and co-pays, voluntary benefits provide a financial safety net that can make HDHPs more attractive to your employees and thereby increase HDHP plan enrollment. 

3. Invest in Wellness  

Wellness programs are a critical, yet often underutilized, tool for benefits cost control.  Employers are well served by sponsoring and promoting benefit programs that focus on prevention and early intervention. Examples include: 

• Fitness reimbursements and gym memberships 

• Employee Assistance programs 

• Nutritional counseling and smoking cessation programs 

• Biometric screenings and health assessments 

A healthier workforce has fewer claims, driving down long-term costs and boosting productivity, which is a fundamental goal of any strategic healthcare plan design. 

4. Explore Alternative Funding Structures  

Reassess the structure of your plan. Moving beyond traditional fully insured models can unlock significant savings and flexibility. Some alternatives offer greater simplicity –- a characteristic that Small to Medium Business (SMB) benefits plans find particularly appealing. Here are several popular alternatives that are worth considering: 

• Level-Funded Plans combine features of full-funded and self-funded plans. They offer premium predictability with the potential for refunds when claims are low and are particularly attractive to SMB benefits plans with healthy enrollees. 

• Self-Funded Plans with Stop-Loss Coverage provide direct control over plan details and cash flow, paying claims directly and using stop-loss insurance to cap catastrophic risk. This approach reduces premiums compared to fully funded plans.  

• Minimum Essential Care & Minimum Value Plans can be strategic components in a layered healthcare plan to achieve full compliance with Affordable Care Act requirements and avoid Part A and Part B penalties. This combination of plans is budget-friendly for employers and significantly less expensive for workers than traditional major medical plans.  

Prepare to act now 

Many companies react to premium hikes each year and don’t proactively manage their spending. Sound familiar? If so, consider redesigning your healthcare plan by introducing proven strategies that support your workforce and respect your budget.  Acting today can serve you well now and for years to come. 

Partner with Daybright  

Daybright Financial excels in navigating today’s complex healthcare benefit landscape. As a specialized partner, we help employers implement precise, proven strategies. Our expertise translates complex options into clear, actionable plans that control costs while enhancing the value of your total benefits offering.  

Ready to get started? Contact Daybright today!

• Category: News
• Tag: Compliance, Employee Benefits