Print Сite this

Health Insurance Benefits and Cost Reduction


The new health insurance benefits tend to impact organizations in a myriad of ways. One is through the goal-setting process and impact on their overall costs. Thus, it is mandatory that the organization ensures that all its employees are safe and secure in their working environment. Thus, they should ensure a suitable working environment, as well as provide effective medical care for its employees. This essay seeks to evaluate how health insurance benefits affect an organization’s strategic goal setting, as well as how organizations can ensure cost reductions while still offering these services to their employees.

We will write a
custom essay
specifically for you

for only $16.05 $11/page
308 certified writers online
Learn More

Impact to Strategic Goal Setting

One of the ways in which health insurance benefits have impacted strategic goal setting for organizations is through ensuring safe work environments. One major strategic goal of organizations is to ensure that their workplaces are free from hazards. Ensuring that the working places are safe and free of danger implies high safety and security of employees. Thus, employers can instigate and come up with preventive measures against harm, for which they would also incur health care cost savings (Gomez-Mejia, Berrone, & Franco-Santos, 2014). Economically, a hazardous environment implies that the dangers and costs of harm at the workplace are high. In turn, this means that organizations will incur high costs to cover their employees’ health care needs.

Secondly, health benefits impact an organization’s goal of human capital management. It is imperative to determine the impact of the health benefits for the employees and the organization. An understanding of these benefits, their costs, and their impact on the organization help the organization to set goals on effective wage level decisions. In effect, an organization can be able to leverage the labor costs versus the benefits payable (Gomez-Mejia et al., 2014). Potentially, the cost of health benefits helps companies to analyze possible labor requirements and whether a company can meet their needs as well as related costs. Thus, it is an effective strategy to ensure human resource planning for effective cost-cutting measures.

Third, an understanding of the health benefits package helps the organization to determine the needs of the employees. Different organizations have different employee demographics. Notably, all these employees have different health needs and, thus, require different health benefits plan. To ensure that the benefits can offer maximum value to their needs, it is imperative that the health benefit is lined with the employee’s needs. Thus, it is a strategic goal of the company to ensure that the health benefits packages they offer to their employees are in line with their demographic needs.

Overall, health benefits, just as other befits impacts on an organization’s cost alignment. It is imperative that an organization determines an appropriate health benefits structure for its employees and analyze its cost implications for the company. Thus, it is crucial that the total health benefits package offered is inconsistent with the organization’s ability to pay. This will also affect the overall compensation strategy of the company in regards to total amounts package. Overall, an increase in health benefits implies that the company is limited to offer other benefits to its employees. Consequently, this understanding enables a company to scrutinize their profit objectives and determine avenues for cost cutting.

Controlling Costs

There are several ways through which a company can ensure minimal health insurance benefits while still offer the package as an attractive retention and retention tool. The first way is through creating an effective work culture. In effect, the company can come up with a work culture that promotes good health and an environment where employees are responsible for their health; for instance, enforcing no-smoking rules at the workplace, among others. This way, employees understand the benefit of adhering to proper behavior, as well as effective lifestyles (Baicker, Cutler, & Song, 2010). In turn, most workers will boast of positive health, further reducing the total amounts that the company would have to spend on health insurance covers, as well as frequent absenteeism (Cancelliere, Cassidy, Ammendolia, & Côté, 2011).

Second is through fostering wellness programs and activities at the workplace. An effective workplace is one where the employees are encouraged to live positively through engagement activities and facilities. One such way is through having a gym at the workplace. Enforcing positive activities like gyms and workouts once in a while help to boost the productivity of the workers as well as reduce the health risks of the employees (Goetzel & Ozminkowski, 2008).Several organizations have applied health cost-cutting measures to reduce the health benefits they pay

Get your
100% original paper
on any topic

done in as little as
3 hours
Learn More

Practical Examples

There are real life examples of companies that have implemented health benefits cost cutting measures. One of the ways that companies are doing so is through providing a favorable working environment that helps to reduce work stress. One survey that was conducted among Northwestern national life companies showed that stress among its employees was a great risk. Out of the 600 US workers that were surveyed, it was established that most were burn out and stressed (WFC Resources, 2011). 7 out of 10 stated that work stress had caused them several health problems making them take frequent over time and offs, essentially leading to poor work productivity (WFC Resources, 2011).

Secondly, companies have discovered that integrating wellness programs at the workplace help to reduce their health care cost burden. One common problem among populations today is obesity that is caused by poor lifestyles like problem drinking and smoking. In effect, one company, First Chicago NBD realized the importance of wellness programs in promoting positive living amongst its employees (WFC Resources, 2011). The company applied a wellness competition program through which most of its employees volunteered to take part to make changes in their lifestyles within the next six months.

Among the things that the employees competed on were muscular flexibility, weight loss, cholesterol level and blood pressures and people that have quit smoking after participating in the competition. Those that scored highly on these issues were awarded certificates and gifts. Further another organization, Bank One in 2002 reported that most of their employees that undertook wellness efforts cost the company 18% less of the total health care expenses that had been set aside, compared to those that did not (WFC Resources, 2011).

Overall, it is imperative that organizations conform to health care reforms through providing the required benefits as stipulated by law. Nonetheless, the provision of these benefits does not imply losses to a company. In effect, companies can come up with wellness promoting programs, online medical services and a positive work culture that fosters good health among its employees. This way, organizations will be able to align with their strategic goal of maximizing profits while ensuring proper workplace environments. Also, this will guide them to strategically plan for their human capital and labor requirement needs.


Baicker, K., Cutler, D., & Song, Z. (2010). Workplace wellness programs can generate savings. Health Affairs, 29(2), 304-311.

Cancelliere, C., Cassidy, J. D., Ammendolia, C., & Côté, P. (2011). Are workplace health promotion programs effective at improving presenteeism in workers? A systematic review and best evidence synthesis of the literature. BMC Public Health, 11(1), 395.

Goetzel, R. Z., & Ozminkowski, R. J. (2008). The health and cost benefits of work site health-promotion programs. Annual Review of Public Health, 29, 303-323.

We will write a custom
for you!
Get your first paper with
15% OFF
Learn More

Gomez-Mejia, L. R., Berrone, P., & Franco-Santos, M. (2014). Compensation and organizational performance: Theory, research, and practice. New York, NY: Routledge.

WFC Resources. (2011). Cutting health care costs. Web.

Cite this paper

Select style


StudyCorgi. (2021, February 10). Health Insurance Benefits and Cost Reduction. Retrieved from


StudyCorgi. (2021, February 10). Health Insurance Benefits and Cost Reduction.

Work Cited

"Health Insurance Benefits and Cost Reduction." StudyCorgi, 10 Feb. 2021,

* Hyperlink the URL after pasting it to your document

1. StudyCorgi. "Health Insurance Benefits and Cost Reduction." February 10, 2021.


StudyCorgi. "Health Insurance Benefits and Cost Reduction." February 10, 2021.


StudyCorgi. 2021. "Health Insurance Benefits and Cost Reduction." February 10, 2021.


StudyCorgi. (2021) 'Health Insurance Benefits and Cost Reduction'. 10 February.

This paper was written and submitted to our database by a student to assist your with your own studies. You are free to use it to write your own assignment, however you must reference it properly.

If you are the original creator of this paper and no longer wish to have it published on StudyCorgi, request the removal.