Employee turnover is a major problem for Indiana businesses. But many leaders overlook one of the key drivers behind it—healthcare costs. Rising employer-sponsored health insurance expenses are forcing companies into impossible decisions. Employers have to choose between shifting more costs onto employees or absorbing those costs and risk profitability.
Neither choice works. Passing more costs to employees makes healthcare less affordable. Absorbing costs squeezes margins, which limits your ability to offer competitive wages or bonuses. Both lead to turnover.
If you’re watching your best employees leave for competitors, it’s time to look beyond salary and culture. Healthcare costs are quietly undermining your ability to attract and retain talent.
In this article, we will explain how healthcare costs are driving employee turnover in Indiana and what businesses can do to take control of the problem before it gets worse.
The Link Between Rising Healthcare Costs & Employee Turnover
Most Indiana employers are paying more than ever for healthcare. Many don’t realize how those costs are pushing their best employees out the door. Understanding the connection is the first step toward solving the problem.
Here’s why healthcare costs are driving employee turnover:
- Higher out-of-pocket expenses hurt employee loyalty. When employers shift more premium costs to employees—or move to high-deductible plans—workers are stuck paying more for less. As their financial stress increases, their job satisfaction declines. They start looking for employers with better benefits and more affordable coverage.
- Delaying care leads to bigger problems. When healthcare becomes too expensive, employees delay routine doctor visits or skip treatment altogether. Eventually, small health issues become bigger, resulting in absenteeism, reduced productivity, and dissatisfaction.
- Healthcare stress impacts productivity and engagement. Employees worried about medical bills are less engaged at work. Financial stress from healthcare costs affects focus, morale, and even physical health. Over time, this leads to burnout and turnover.
- Employers lose their competitive advantage in hiring and retention. Employers offering limited or expensive health plans struggle to attract and retain top talent. Candidates compare total compensation packages—and healthcare costs matter. If your benefits don’t measure up, you lose people to competitors.
If you ignore the link between healthcare costs and employee turnover, you risk higher churn, lower productivity, and a shrinking talent pool. Businesses that recognize this connection are better positioned to make strategic changes that protect their workforce.
How Healthcare Costs Are Driving Employee Turnover & Affecting Business Growth
Employee turnover is only one piece of the puzzle. Rising healthcare costs have a ripple effect that can slow down growth and damage long-term profitability. If you’re not addressing the impact of healthcare costs beyond turnover, you’re missing a key opportunity to strengthen your business.
Here’s what else happens:
- Shrinking Wage Budgets: As healthcare premiums rise, employers are forced to divert money away from wage increases, bonuses, and hiring.
- Slower Growth and Innovation: With budgets strained by escalating healthcare costs, businesses have less to invest in expansion, new products, or technology upgrades.
- Higher Training and Onboarding Costs: Every time an employee leaves, you incur recruitment, onboarding, and training costs—expenses that pile up fast when turnover is high.
Left unchecked, rising healthcare costs create a cycle that limits profitability, stalls growth, and increases operational risk. Employers who take control of these costs protect their bottom line and create a more stable environment for long-term success.
What Indiana Businesses Can Do to Reduce Healthcare Costs (& Keep Their Best Employees)
Indiana employers don’t have to accept rising healthcare costs and turnover as inevitable. Businesses that take a proactive approach are seeing 15-30% savings while offering better benefits. If you’re ready to break free from traditional insurance models and take control of your healthcare strategy, start here.
1. Review Your Current Costs and Data
Most employers don’t have visibility into what they’re actually paying beyond monthly premiums. Understanding the details behind your healthcare spend is the foundation for cutting unnecessary costs. This is a critical step for Indiana companies struggling with how healthcare costs are driving employee turnover. Employers should:
- Identify hidden fees and markups.
- Understand where your healthcare dollars are going.
- Use this data to find areas where you can cut waste and improve efficiency.
Reviewing this data arms you with the insights needed to make smarter, more cost-effective decisions. Employers who consistently monitor their costs can adapt faster, avoid unnecessary renewals, and maintain better control over long-term expenses.
2. Explore Self-Funded Health Plans
With a self-funded plan, you only pay for the healthcare your employees actually use—instead of prepaying insurers based on projections. More Indiana businesses are choosing this model to improve cost control as they:
- Gain more control over healthcare spending.
- Reduce unnecessary administrative fees.
- Access real-time claims data to make smarter decisions.
Companies that successfully switch to self-funding often see significant savings and greater flexibility in tailoring benefits to employee needs. This strategy also allows employers to reinvest those savings into better benefits or other critical areas of their business.
3. Direct Contracting with Healthcare Providers
Skip the insurance carriers and negotiate directly with healthcare providers for services. This approach allows employers to:
- Eliminate inflated insurance markups.
- Establish transparent, fixed rates for common procedures.
- Improve provider relationships, giving employees better access to care.
Direct contracting isn’t for everyone, but employers that implement it often experience long-term savings and increased employee satisfaction with their healthcare options. It strengthens trust with employees by offering clearer choices and often better-quality care.
4. Demand Transparency and Accountability
Stop accepting vague explanations and "discounts" from insurance carriers. It’s time to hold vendors accountable for delivering real value. Employers should:
- Require full transparency on pricing and claims.
- Compare the actual costs of services to fair benchmarks.
- Hold vendors accountable for delivering value.
Transparency helps you make smarter decisions, ensuring that every dollar spent improves employee benefits and reduces waste. Businesses that prioritize accountability are better equipped to create a sustainable healthcare strategy that supports growth.
Rising healthcare costs aren’t just a finance problem—they’re an HR crisis. If you want to retain your top talent and stay competitive, you need a healthcare strategy that delivers better benefits at a manageable cost.
Indiana businesses that take proactive steps to control healthcare spending are seeing reduced turnover, improved employee satisfaction, and stronger hiring outcomes. The companies that address how healthcare costs are driving employee turnover will be the ones positioned for long-term success.
Ready to take control of healthcare costs and keep your workforce strong? Download our free guide, Download our free guide, "The Employer’s Guide to Fixing Indiana’s Broken Healthcare System," and explore how leading Indiana businesses are doing it.
Please let us know if you have any questions. We understand that local companies have unique needs that most national firms don’t consider or struggle to identify. This leaves your people with a less effective, one-size-fits-all benefits plan. However, our ability to cater to the needs of our clients comes from decades of client partnerships. This perspective allows us to fully address unique needs and generate creative benefits plans.
You shouldn’t have to worry about just being a number, offering a generic plan, or getting the unique support you need. Call us today.
This Benefits Insights is not intended to be exhaustive nor should any discussion or opinions be construed as professional advice.