Despite the decades-long focus of traditional benefits advisors, creative communications approaches and personal technology tools, American employers find their workers and family members still have no idea how health benefit plans provided at work … actually work.
Consider, from the 2018 Alegeus Consumer Health and Financial Fluency Report:
- 42% of Americans said they are not confident in their knowledge of how Health Insurance works
- 50% were unable to answer True/False questions about Premiums and Deductibles, the most basic features of Health Benefits Plans
These findings echo previous studies, including one by PolicyGenius targeting Americans in 10 of the largest cities in the US. A clearly disappointing percent of those studied could say they “definitely understand the following terms”:
- Deductible – 50%
- Co-Insurance – 22%
- Co-Payment – 52%
- Out-Of-Pocket-Maximum – 42%
- Only 4% were able to understand what ALL FOUR of these terms mean
- 36% of Millennials could not correctly identify the meaning of ANY of them
Since Health Benefits represent the costliest and fastest growing business expense for employers, and since it uniquely is delivered as a “benefit” to workers, executives should be really concerned. Historic models and traditional advisors have apparently failed to rationalize this “benefit promise” with the attendant cost, and with the poor understanding by the its targeted user….workers and their families.
Too often, HR and Benefits leaders avoid this literacy challenge by simply extending the same coverage year after year, assuming that their workers at least understand their current coverages. In fact, technology has been increasingly deployed to help a worker just “auto-renew what I already have” even though considering needs and choosing alternatives during the dreaded annual open enrollment process might be the better solution.
The same PolicyGenius study confirms this might be very short-sighted indeed:
- 43% of workers studied “intend to switch coverage at the next renewal”
- 40% said they are interested in taking a more active role in health-related finances
We need a better measure of the value of health benefit coverage…and one exists. Its called Actuarial Value (AV), and it allows a holistic comparison of the value of an entire health benefit coverage vs. its related costs. Using today’s technology capabilities, AV can effectively consider not just the four basic components of health benefit coverage (Deductible, Co-insurance levels, Co-Payments and Out-of-Pocket Maximums), but also the dozens of less visible and less understood coverage features in today’s health benefit structures. Further, when applied effectively, AV can encompass both the basic coverage and any tax advantaged accounts (HSA, FSA, HRA) or voluntary coverages (Critical Illness, Hospital Indemnity, Accident) that increasingly are available to wrap around the basic coverage. Its a particularly effective tool today, considering the degree of such “layered coverages” on top of core health plans.
New platforms like Hixme, have built their entire WorkPlace Market on the ability for both employers and their workforce to visualize current and possible coverage alternatives using an unbiased and consistent AV measure for all. Hixme’s enrollment platform and employer analytics tools are built from the ground up using this approach.
With such broad measures applied to new technology and delivery models, we may finally see worker health coverage literacy improve and a returning sense of “benefit” by workers and their family members.