The challenges around high out-of-pocket healthcare costs for people with insurance coverage has recently garnered a lot of media attention.
There have been myriad stories about patients receiving surprise bills for out-of-network providers or out-of-proportion fees for minor services. It’s reached the level of public debate, and the Trump administration recently issued an executive order intended to address lack of transparency in prices for healthcare goods and services.
Unexpected and sometimes outrageous bills aside, cost-sharing and out-of-pocket costs are concepts employees need to understand and consider before they seek care to minimize surprises. However, while more than half of employees have a good grasp of up-front costs including premium and deductible, less than 40% understand coinsurance and out-of-pocket maximums.
As benefits have become more complex, and the cost of healthcare has increased, foundational benefits literacy is vital for employees. It enables them to choose the right benefits options based on their personal situation, and it empowers them to use their benefits wisely when they need them.
However, benefits literacy is elusive for most. Our MyChoiceSM Recommendation Engine Benefits Insights Report found that for 50% of employees, the level of expertise with their benefits extended only to knowing where their ID card is. Just under 20% feel like they are benefits experts. The rest are downright confused.
This lack of benefits knowledge is a serious issue for both employees and employers. Benefits are intended to provide financial protection and peace of mind against the risk of illness or injury. And, employers are paying a significant amount to provide this safety net.
At the same time, benefits are a powerful tool for recruitment and retention, which is a major consideration for employers in the tight labor market. While statistics vary, up to 66% of employees cite benefits and perks as their top consideration in accepting a new position. The same survey found that 42% of employees are considering a new job because of benefits, while 55% have left a job for better benefits elsewhere.
Employers can’t afford to have employees who don’t understand and appreciate their benefits and may leave for what they perceive as better options elsewhere.
Employees’ perception of benefits begins with the enrollment process and it’s reinforced during Annual Enrollment. How decision-making is supported during these interactions impacts how employees feel about their benefits. But, it’s also where a lot of employees either get tripped up or fail to act. This is a missed opportunity for both employees and employers.
The vast majority (93%) of employees don’t make any changes at all during Annual Enrollment. Of those who do, 19% don’t feel confident in the decisions they made.
Lack of knowledge and confidence can undermine how employees see the value of their benefits. It’s also both a symptom and a result of less-than-informed decision-making.
Poor benefits literacy is only one of the common pitfalls associated with benefits decisions. Also at play are employees’ emotional states as well as issues and concerns around financial well-being. Together, these factors help drive how people interact with their benefits.
None of these issues is insurmountable. Employees are human, and they are fallible just like the rest of us. They are also not benefits experts. Luckily, to make better decisions they don’t have to be. They simply need relevant tools, resources and guidance provided by their employer.
To help nudge employees toward better comprehension, utilization and appreciation, employers first need to understand the forces that contribute to how employees make decisions.
This e-book offers insights on the most common mistakes employees make when choosing their benefits. It also includes suggestions for how to address these issues so you can provide employees with the benefits they so highly value while getting the most from your benefits investment dollars.