Education About Health Benefits Can Lower Costs for Employers and Employees

Health care coverage is ranked as one of the top three benefits an employer offers by nearly 80% of employees surveyed by Lively, a health savings account (HSA) platform for employers and individuals.

This is more than any other benefit—competitive salary and a 401(k), respectively, follow.

But, employers know that health care coverage is the most costly benefit to provide and health care expenses are among the highest expenses for employees. So, it is not only important to provide a great benefit, but to educate employees about their benefits so they use them properly, which leads to lower costs for both employers and employees.

According to Lively’s survey of 1,000 randomly selected U.S. adults ages 18 and older, conducted June 5 and June 6, 30% say they completely understand their health benefits and 32% say they somewhat understand them. However, other surveys have found employees do not understand some benefits as well as they think they do—especially HSAs.

Respondents to Lively’s survey report confusion over high-deductible health plans (HDHP) and health reimbursement accounts (HRAs). The survey found that young people (ages 18 to 24) have far less understanding of preferred provider organizations (PPOs) (18%) and health maintenance organizations (HMOs) (19%).

“Without a full understanding of health care plan options and the benefits each can offer, it is difficult for employees to know they are choosing the best-fit plan,” Lively notes in its research report.

This could lead to higher costs for both employers and employees. For the 2017 plan year, 56% of large employers on the Benefitfocus Platform offered an HDHP in addition to “traditional” copay-based plans—up from 52% the previous year. However, employee selection behavior analyzed by Benefitfocus indicates HDHPs are not right for every employee. For example, Benefitfocus says, an employee in an HDHP who should really be in a PPO can do much more harm than good to a company’s bottom line in the long run. If unable to afford paying out-of-pocket cost, the employee may go into debt or forgo necessary care, which could mean greater costs down the road.

In addition, a survey by HSA Bank revealed that nearly one in five consumers are not able to identify their health plan type. The firm notes that plan type influences how consumers access care and pay for health care services because the health insurance plan determines the in-network providers, treatment and prescription coverage, as well as premium, copay, coinsurance, deductible and out-of-pocket costs. Knowing the costs involved in one’s health care is key to being an engaged consumer. Thirty percent of consumers don’t know their premium, deductible or out-of-pocket cost amounts.

Studies show that going to the doctor regularly and preventatively is more effective for long-term health and well-being, yet only 54% of adults surveyed by Lively report that they do this. Almost half only see a doctor if they are sick or something catastrophic happens (such as a broken bone). Lower-income adults tend to only go when something catastrophic happens. Lively suggests many employees may not realize that their health insurance plan covers some level of preventive care, so helping employees understand all the components of their coverage will allow them to take full advantage of their insurance.

“Building in wellness programs within employee culture, as well as flexibility for employees to make and attend doctors’ appointments, is imperative to fostering a healthy work environment,” Lively adds.

Lively also suggests offering a wide breadth of insurance plans and options to employees, and educate them about the differences. “Health care is already complicated, so finding ways to simplify it for your hard working employees is crucial to their overall health and wellness. Health care plan cost details are changing rapidly and acronyms alone will not tell employees what is best for them,” the firm says. It suggests employers find tools to explain the differences between PPOs, HMOs and HDHPs as well as HSAs, health flexible spending accounts (FSAs), and HRAs.

And while it seems counterintuitive to holding costs down, finding ways to financially support employees’ health and wellness, like contributing to an HSA or sponsoring employee gym memberships can lead employees to use benefits correctly and become healthier, actually lowering overall health care spend for employers.