5 Strategies for Reducing Health Benefits Costs in 2022

Posted: 4 years, 3 months ago

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(Updated January 2026)

Managing Rising Health Care Costs Without Sacrificing Benefits

Health care costs have been climbing for decades — and that trend hasn’t slowed. While the COVID-19 pandemic reshaped the health care system in unprecedented ways, ongoing inflation, workforce shortages, pharmaceutical pricing, and increased utilization continue to push employer-sponsored health plan costs higher year after year.

As we move into 2026, employers should expect medical costs to continue rising at levels consistent with the past several years. Industry reports continue to project mid-to-high single digit annual increases, driven largely by prescription drug spending, specialty care, and delayed or deferred care finally being addressed.

For employers already managing tight budgets and competitive labor markets, controlling benefits costs without eroding plan value has never been more important. The good news? There are strategic ways to manage spending while still supporting employee health.

Below are five proven approaches employers are using today to control costs more effectively.

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1. Get Smarter About Prescription Drug Spending

Prescription drugs remain one of the fastest-growing components of health care costs — particularly specialty medications used to treat chronic and complex conditions.

While many employees assume higher-priced brand-name drugs offer better outcomes, that’s often not the case. Generic medications continue to meet the same FDA standards and are frequently just as effective at a fraction of the cost.

Employers can help manage drug spend by:

• Educating employees on generic vs. brand-name cost differences

• Using tiered prescription plans that incentivize lower-cost options

• Fully covering certain generics or chronic-condition medications

• Reviewing pharmacy benefit manager (PBM) contracts regularly to ensure transparency

Small plan design changes can lead to meaningful long-term savings for both employers and employees.

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2. Encourage Employees to Be Active Health Care Consumers

Health care costs are easier to manage when employees understand how to navigate the system.

Price transparency tools — now more widely available than ever — allow employees to compare costs for procedures, imaging, and services before care is delivered. When employees shop for care the same way they shop for other major expenses, unnecessary overspending often declines.

Employers can support this by:

• Promoting carrier-provided cost comparison tools

• Encouraging conversations with providers about cost-effective treatment options

• Offering education around when urgent care, telehealth, or primary care is appropriate

Informed employees tend to make better decisions — for their health and the plan.

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3. Leverage Health Savings and Spending Accounts

Health plans with savings components continue to grow in popularity because they put more control in employees’ hands.

Options like:

• Health Savings Accounts (HSAs)

• Flexible Spending Accounts (FSAs)

• Dependent Care Accounts

help employees plan ahead for medical expenses using pre-tax dollars.

Allowing balances to roll over year to year (when permitted) reduces the “use it or lose it” mindset and encourages thoughtful spending. Employer contributions or matching strategies can also create tax advantages while increasing perceived plan value.

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4. Expand Access to Virtual and Digital Health Options

Telehealth is no longer a temporary solution — it’s a permanent part of modern health care delivery.

Virtual visits now cover everything from urgent care and behavioral health to chronic condition management and follow-up appointments. These services:

• Reduce time away from work

• Improve access to care

• Typically cost less than in-person visits

Many plans now encourage employees to start with virtual care when appropriate, reserving in-person visits for situations where hands-on treatment is necessary.

For employers, expanded virtual care options often result in lower claims costs and higher employee satisfaction.

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5. Reevaluate How the Plan Is Funded

For some organizations, meaningful savings come from reassessing how their health plan is structured and funded.

Alternatives to fully insured plans may include:

• Self-funded arrangements

• Level-funded plans

• Hybrid or reference-based pricing models

Each option comes with its own risks, compliance requirements, and administrative considerations. The right solution depends on company size, claims history, cash flow, and risk tolerance — and should always be evaluated carefully.

With today’s competitive labor market, many employers are cautious about shifting costs directly to employees through higher premiums or deductibles. Long-term retention, morale, and access to preventive care must be part of the conversation.

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Final Thoughts

There is no one-size-fits-all solution to managing health care costs. The most effective strategies are those aligned with your workforce, budget, and long-term business goals. With the right plan design, education, and funding approach, employers can control rising expenses without compromising the quality of benefits employees rely on.

If you’d like help evaluating your current benefits strategy or exploring cost-control options for the year ahead, our team is here to help.

Call us Monday-Friday 8am-5pm (800)686-8664 or email us Service@TheSpireTeam.com

 

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