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December 6, 2016
Whether you’re in the hospitality, construction, healthcare, or manufacturing industry, the rising cost of healthcare continues to be at the forefront of each respective industry’s budget process. Within manufacturing, increasing healthcare costs is the number one concern just ahead of unfavorable business conditions according to the most recent survey from the National Association of Manufacturers. Manufacturing business owners all share this concern, but also realize that offering attractive benefits is necessary to keep up in an increasingly competitive job market. Considering some of the answers from the latest NAM Outlook Survey below, the concern is justified, and the issues appear to be escalating each year:
With these potential increases in mind, many manufacturers have been exploring flexible healthcare options. An emerging trend observed in this space has been implementing a Health Savings Account (HSA) plan. “For the 2016 plan year, employees at manufacturing companies selected an HDHP [high deductible health plan] over a traditional plan 46 percent of the time” (Benefitfocus). Based on these results, manufacturing employers have an opportunity to encourage their employees to opt for HSAs or flexible spending accounts (FSAs) to cover HDHPs’ higher out-of-pocket expenses.
An HSA enables employees to use tax-free money for medical expenses with no tax or penalty while using the funds. This has allowed employers to save money on their healthcare costs, while still providing high-quality benefits to their employees. An HSA can help manufacturers get a grasp on the rising costs of healthcare, while also providing a tax advantage savings account to the employee, which results in increased employee retention/attraction.
While the manufacturing industry is facing some serious challenges in the coming years, there are emerging trends that will help you regain control of your total healthcare spend. When applied mindfully in an appropriate context, these strategies can mitigate the future increases. To get started exploring which options are available to your organization, contact your Parker, Smith & Feek account team.