Your Employees Are Probably Choosing the Wrong Healthcare Plans. Here's How to Fix That.
Every open enrollment season, most employees select plans that don’t match their healthcare needs or expected utilization — which ends up costing both the employee and employer. Written by Nava Benefits’ Manager of Benefits Analysts, this guide walks HR leaders through four ways they can improve their benefits education and plan enrollment tools.
The employer benefits space is changing fast. Innovative vendors and point solutions have exploded onto the scene and grew to dominate their markets — all in an effort to give employees a simpler, more efficient, and overall better healthcare experience.
Want to order a prescription the same way you would order late night Taco Bell? There's an app for that. Feeling sick and don't want to leave the house? Open your browser and you can speak to a doctor in a matter of minutes.
Despite all the progress, there's been very little innovation around how employees answer the most fundamental question: "Which benefits plan should I enroll in?"
...It turns out that this is a big problem.
As much as HR leaders wish they had the time to personally help each of their employees, most folks still feel like they're on their own in the open enrollment process. This often leads them to select an expensive plan with a low deductible, thinking it'll save them money; little do they know that their utilization will end up being low enough that the less expensive plans would have covered their needs at a lower cost, all while providing the same health outcomes!
And this ends up costing both the employee in higher contributions and the employer with higher premiums. According to a study by Carnegie Mellon, most employees who chose a low deductible plan would have gotten the same or better results with a $1,000 deductible while saving up to 42% on their annual premiums.
While you can’t make these benefits decisions for your employees, here are four ways you can help inform their choices so they can make the best elections for themselves and their families.
1. Use tech to make data-driven recommendations for employees
One primary reason why people choose the wrong plan? Without personalized guidance, this process can feel a little once-size-fits-all.
Employees often don't know which plan provides the level of coverage they'll need for their unique health needs. This means they have no choice but to make predictions on what their utilization will look like in the next year, and must resort to guessing which plan would provide the best coverage.
Wouldn't it be nice if you could take each of your employees' health needs and map out how each plan would work for their situation? With plan enrollment tools, it's possible.
Tech-driven enrollment tools seek to solve that issue by analyzing their previous usage and expectations for the next year, and offering a personalized analysis to guide them towards the best choice.
Our Nava Advisor Kelley Elliott, VP of Global Rewards at Delta Air Lines, recently weighed in on tactics to support plan choice among employees. "What I think can help employees and employers the most," she told us, "is a plan recommendation tool that asks a series of questions about you as an individual, as well as your risk tolerance, and based on that, gives you a recommendation."
For example, the navigation tool Alex by Jellyvision asks users about their health needs and expected plan utilization for the next year, and then recommends the most cost-effective plan. The Nava team recently took Alex for a spin as part of our own open enrollment process — and several Navanauts reported that it helped them feel more confident in their benefits selection.
They especially loved how the tool visualized exactly how each plan would cover their expected needs, as well as unforeseen emergencies. Here's an example of how Alex maps out the estimated coverage of three plans:
2. Rebrand your plans to better guide employees
Picture this: you're in a department store, shopping for a new coat to prepare for a mild winter. When you find the style that fits you best, you notice some signage featuring another style, claiming that it's higher quality and will keep you warmer on the off chance of a severe unseasonal snowstorm. Even if that coat may not meet your needs, you may feel pressured to go with the "better" choice — just in case, right?
When we're faced with a decision, the way each choice is presented to us has a major impact on where we land. If you perceive one option as being inherently "better" or the default choice, chances are high that it'll win out.
So knowing this, how should you market your plans? Well, first take a look at what you call the plans in the first place. "One tiny thing that has a huge impact is how you name your plans," Kelley explained. "Let's say you have a gold, silver, and bronze. What do you want? You want the gold, because it's the best. I think it's important not to give them value attached to the name, because people will always want the best."
If you had to grade your employer's plans based solely on their names, could you immediately pick out which one might provide the "best" coverage? Is there a clear "hierarchy" of plans? Because if one is the "Cadillac" plan, then another must be a "clunker," right?
Of course, the metallic level plans (gold, silver, etc.) do have a specific meaning, in that they designate the amount of cost sharing in each plan. But your employees probably don't know that. In fact, most probably just think gold = good, and that's that.
Instead, try assigning neutral names to your plans. Then when you discuss those plans, be sure to specify that there is no "right" choice overall. In other words, explain who would benefit most from each plan, rather than letting your employees assume which plan is "best" based solely on the plan's name. If you make an effort to demystify this point, the more likely your employees will weigh each plan equally.
3. Simplify your benefits guide
Here's the unfortunate truth: benefits are hard to understand. To many employees, open enrollment is more than a chore — it's also like trying to understand a new language. When they're given a novel of a benefits guide, it starts to look a lot like homework.
So help make it easy for them. Be sure your benefits guide is simple and easy to understand. Skip the jargon and explain these concepts in real-world terms.
Looking for a quick fix to amp up your guide? Here are some ideas:
- Highlight what's changed since last year, so folks know what to focus on.
- Include a glossary of basic terms — because who really knows the difference between a deductible and an out-of-pocket max?
- Offer a side-by-side comparison of your plans. Bonus points if it breaks down how they would cover both common health issues and worst case scenarios. For example, how would they compare in covering a primary care appointment, the birth of a child, or an emergency room visit?
- Get creative with infographics and videos. It's more memorable, more engaging, and can reach more learning and comprehension styles.
4. Keep your door (and ears) open, and communicate often.
During open enrollment and year round, you are your employees' best resource to learn more about their benefits. "Simplifying communications and educations and simplifying wherever you can in terms of plan design," Kelley emphasized, "I think it's the best way to start. Educate as much as you can."
After distributing your benefits guide, follow up with more opportunities for employees to learn about their plans leading up to open enrollment. For example, holding an interactive live session to go over the benefits guide may help boost comprehension. Open office hours can also give folks the opportunity to ask more specific questions.
Your benefits broker can (and should) play a significant role in supporting employees through open enrollment and beyond. Reach out and see how they can act as a resource to answer questions and guide your teams through the benefits selection process.
Looking for more open enrollment guidance? Reach out for a personalized analysis here.