Helping Employees Choose the Best Health Care Benefit

Deductibles and premiums linked to employer-sponsored health insurance have been rising at more than seven times the pace of inflation and wages since 2010, according to a joint study by the Kaiser Foundation and the Health Research and Educational Trust. For 2016, deductibles rose by 50% on average and employees’ shares of overall health care costs have also increased, according to the latest Health Plan Survey released by United Benefit Advisors (UBA).

This trend, which is expected to continue into 2017, underscores the need for employers to highlight the value of their benefits packages in clear and concise ways that boost enrollment. However, several studies suggest that employees are having difficulty understanding the benefits and health insurance options available to them.

According to a 2016 survey commissioned by health care concierge Accolade, more than half of respondents said they have difficulty “Having to coordinate all the different aspects of benefits and health care.” Fifty percent said they have trouble “selecting and understanding benefits.”

Some studies even suggest that consumers choose poorly and that random selection would be as effective or even more effective in some cases, according to the Institute for Healthcare Consumerism (IHCC).  

“I think a lot of employers tend to forget that the American public has pretty low levels of what we like to call health literacy,” explains Kim Buckey, vice president of DirectPath, a health care consultant for large employers. “What that means is that many people don’t understand basic concepts like deductibles, copay, and coinsurance.”

Employers often provide their employees with educational material about their benefits that’s long and complicated, finds Craig Johnson, a partner with global human-resources consulting firm Mercer.

Johnson recommends employers lead with “clear, short and well-written overviews” containing charts and infographics. He notes, however, that it may be difficult for employers and human resource departments to communicate these messages considering the amount of information they would like to provide so employees can make the best health care choices.

“We typically tell clients to resist the temptation to go too deep and too technical,” says Johnson. “We say, ‘Let’s provide these bite sized chunks of information, and if someone is looking for more information based on this, let’s give them easy access to it or tell them where to go.’”

Johnson told PLANSPONSOR about a national client which replaced an ineffective 40-minute PowerPoint presentation about its benefits program with a 20-minute version that boosted engagement. It started with a two-minute video focusing on the company’s “philosophy behind benefits and the importance of making good selections.” It was then followed by a presentation about the business rationale behind its benefits program, and short video clips about what the firm thought were “the most important benefits to talk about in front of a group.” It ended with time for questioning and pointers to where employees could access more information about specific topics such as new benefits and changes to existing ones. Regional HR leaders were able to modify this particular information to tailor to specific employees if needed.

Johnson notes it’s important to know how your employees consume information so that they can get the most out of enrollment materials provided to them outside the workplace.

Buckey and Johnson also highlight the importance of breaking down benefits communication to all skill levels considering the fact that non-employee beneficiaries such as spouses would need to access this information as well.

As noted in a white paper titled “A Business Case for Benefits Communication” by United Benefit Advisors, employers can survey their employees to learn how they consume information. Johnson says large organizations can also gain insight from their payroll systems, enrollment applications, and intranet—where they can gauge analytics like the number of people visiting the HR section of their website or the materials with the highest click frequencies.

While the data will be specific to different employers, Johnson nonetheless recommends that companies focus on a good “media mix” that utilizes mobile, desktop, and print among other tools. He also warns employers not to devote too much effort to one particular medium such as email.

In a case study by IHCC, a client and global manufacturer of pharmaceutical packaging and delivery systems drove transition from its point-of-service plan into its consumer directed health plan (CDHP) from 7% to 17% and more than doubled its enrollment after making a few changes. These changes included using employee testimonials in annual enrollment newsletters, introducing online carrier tools, and hosting live educational webinars before placing them on its company intranet for on-demand viewing.

While 85% of Americans are using the Internet and mobile devices, according to the IHCC, some employees in several industries lack access to email and many aren’t allowed to access their mobile devices at work. This is important to note considering several employees simply don’t have the time to fully understand their benefits—something Johnson has drawn from diverse focus groups across numerous industries.

Moreover, these focus groups have also highlighted the need for personal communication. “What we hear a lot of people say from all generations in these focus groups is ‘I wish there were more face-to-face opportunities to learn more about this.’”

To meet this need, Mercer recently partnered with Accolade to create a new program for employers and their insurance carriers. The Mercer Complete Care initiative offers employees access to Accolade health assistants who can answer their questions and explain benefit options via phone, the Internet and mobile applications.

DirectPath provides similar services for employers as well.

Education is also important for employees to know the true costs of their health plans, Buckey explains. She gives a personal example of how she once switched from a health plan with a low premium and high deductible to a new one, which increased her premium but dramatically reduced the cost of prescription drugs—an aspect of health care her family used frequently.

However, it may be difficult for some employers to reach employees on a personal level. Many insurance companies can provide their own benefits experts to relay this information. Some larger employers have also utilized roadshows where HR and health insurance professionals travel to several locations to teach employees about benefits options available to them. Still, some employers can benefit from outsourcing benefits communication.

Regardless of the method, it’s important for employers to highlight what they believe are the most important aspects of their benefits packages as well as any changes.

The IHCC recommends employers emphasize the specific benefits that employees can use to supplement their medical coverage, such as cash benefits paid in the event of critical illness and accident or hospital insurance that can “work in tandem with a CDHP by helping to offset the deductible.”

Employers can also benefit from actively promoting wellness programs that can encourage employees to adopt healthier lifestyles.

Johnson’s research finds that these programs are moving from niceties to “must haves” especially among larger companies. These programs such as gym membership discounts or on-site health risk assessments can help employees potentially lower their medical bills resulting in lower costs for the employer as well. But regardless of how beneficial these perks can be, they’ll amount to lost expenses if employers can’t engage employees.

A recent survey by RAND showed that 80% of companies provided their employees with incentives averaging $186 per employee per year, but most was wasted because wellness programs were not properly structured.

Employee analytics and demographics can help in this area as well.

“Wellness programs work best and get greatest adoption when they are tailored as much as possible to the individual,” says Johnson. 

He points to the hypothetical situation of how one company in which most employees are in a certain age group would benefit more from programs that aim to prevent the health risks those ages are most prone too. For larger companies, Johnson emphasizes that these wellness programs need to be accessible to all employees. He gives an example of how a company’s wellness program could fail if it’s primarily of most use to employees in a certain location such as its corporate headquarters.

Education around these programs can’t just be around open enrollment either. “Each year, build excitement around a program to maintain and sustain it,” Johnson recommends. “Sustainability is just as challenging as developing one and taking it off the ground.”

The same can be said about benefits. “Benefits communication needs to be year around,” suggests Buckey.

The results could be happier, healthier and more productive employees which could also bring some wellness to an employer’s bottom line, as many studies suggest.

Three studies by the Journal of Occupational and Environmental Medicine linked stock performance to corporate wellness and found that companies with high-performing health programs for employees out-paced the Standard & Poor’s (S&P) index by as much as 16% a year.

Gallup’s “State of the American Workplace 2010-2012” report found that companies with highly-engaged employees were 21% more productive and 22% more profitable than those with engaged workers.

Another crucial step employers can take to have an effective open-enrollment season is to prepare for the wave of new regulations and compliance requirements in light of the Affordable Care Act (ACA).

2016 was the first year that employers with at least 50 full-time employees can face penalties without providing adequate health insurance as defined in the ACA. Workers paying more than 9.66% of their household income for employer-sponsored health insurance can also trigger a penalty, according to the Kaiser Foundation.

Non-grandfathered health plans taking effect on or after January 1, 2016, will face changes as well. For these plans, maximum out-of-pocket health care costs for essential health benefits (EHB) can’t exceed $6,850 for self-only coverage and it can’t exceed $13,700 for family coverage. For 2017, the self-only coverage maximum is $7,150 and the maximum for family coverage is $14,300.

Buckey notes that a major ACA compliance issue for employers last year was failing to report tax IDs for dependents. She says open enrollment season would be a great time to collect that information considering the fact that employers have a limited time to deliver this and other necessary reports before facing a government penalty. “Some communication about why this is important would benefit the employer and the employee,” she says.

In May, the Equal Employment Opportunity Commission also released its final rules regarding the implementation of the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act to employer-sponsored wellness programs.

To assist employers, Mercer has put together a list of top 10 compliance considerations for 2017.