Category: HR KPIs.

It goes without saying that most employers try to offer their employees the best healthcare plans. However, health care plans are becoming more and more expensive, which translates as trouble for employers, particularly the small to medium ones.

An HR metric that isn’t used as often as it should is the Health Care Expense per Current Employee. This is a great tool one can use in order to see exactly how much money is blown on health insurance.

What Is the HCECE?

The HCECE is basically the figure you get from dividing the total health care costs by the number of employees. This will help you a lot when you try to assess the Percentage of Cost of Workforce, to give you one example.

If you feel like your company is spending more than it’s bringing about, perhaps it is time to calculate the percentage of workforce and of course, you can’t do that without the HCECE.

You should know by now that health care costs are pretty high and that they depend on a number of aspects: the location of your company, the type of healthcare plan you’re offering your employees and the provider, among others.

Believe it or not, some employers have not the slightest idea what the real cost of healthcare is. They simply purchase the plan that is in vogue and that’s it. First of all, such a practice is wildly counterproductive, since they could easily save more on healthcare plans without making their employees go through the roof.

Second of all, not knowing their HCECE, they don’t actually have a good grasp of what’s happening in their companies, from a financial standpoint. This obviously means that they’ll continue to pay more than they should have until they bleed their companies dry.

How Can I Reduce These Costs?

The first natural step is to see whether or not you’re overcharged by the provider. If the costs keep on surmounting and the benefits don’t quite mold on those costs, you might just be one of the “lucky” guys that have been scammed by their healthcare providers.

Keep in mind that we’re not talking about one single insurance plan, but about multiple ones that add up to a yearly figure that would make people that have never suffered from migraines have 100 consecutive fits.

Most employers would blame their financial departments for not coming up with ideas to reduce health care costs and they shouldn’t simply because this is something that the HR reps should be tasked with.

They should propose people to be fine with changing healthcare providers and getting lower salaries in exchange for bigger bonuses that are made up of the money that would’ve gone into the provider’s pocket for no good reason.

The Bottom Line

Healthcare costs are among the biggest expense in any company. Calculating the HCECE will let you know exactly how much you’re paying for your employees’ insurance and will most definitely help you realize that you’re overpaying.

The best way to deal with this kind of problem is to summon your HR reps and your personnel and make your case.

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