By helping employees choose their best value health plan, employers can positively impact employees’ health and wallet. Two recent studies from Aflac and the TIAA Institute illustrate that this matters more this year than ever before because:
- Employees continuously choose the wrong health plan, which affects their long-term ability to save.
- Helping employees choose a cost-effective plan will reduce the financial and health burden created by COVID-19.
“Helping employees choose a better health plan can solve so many of the problems these important studies reveal, including rising health care costs and consumer confusion, overspending, and general dissatisfaction with their benefits” says MyHealthMath Chief Medical Officer, Elizabeth Coté. “Decision support that works—that really helps consumers identify the right plan for their specific needs and budget—is key to overcoming the cost inefficiencies illustrated by these studies.”
Below, we summarize four key problems the studies reveal, and explain why health plan decision support is a simple, effective, and timely solution.
Problem one: People are choosing the wrong health plan and losing money
The TIAA Institute’s new study, “Overpaying and Undersaving: Correlated Mistakes in Retirement Saving and Health Insurance Choices,” provides convincing evidence that a majority of employees are choosing an unnecessarily expensive plan and losing money—on average, $1,700 a year. This study echoes previous studies on poor consumer plan choice, illustrating that this is an ongoing problem that requires a new solution. Moreover, the TIAA study also found that people who overpay on health insurance are less likely to match their employer’s retirement contributions. Choosing the wrong plan, then, has far-reaching financial consequences for consumers.
Why does health plan decision support matter? The TIAA study adds another data point to a body of evidence showing that people need more help when choosing a health plan. In fact, only four percent of Americans understand the healthcare and insurance terminology needed to choose the right plan. By providing decision support, employers can reduce confusion and empower employees to choose an optimal plan and save.
Problem two: People’s finances are uniquely at risk this year
COVID-19 has drastically impacted people’s finances. According to Aflac’s 2020 Workforce Report, a third of employees said their finances have been moderately or majorly impacted by the pandemic, with 36 percent reporting a loss of income or job and 20 percent reporting an unexpected healthcare cost. Reducing healthcare expenses, which account for 8 percent of an average household’s expenditures, is a direct way to address this financial burden.
How does this relate to decision support? People are overbuying health insurance because they are confused. Employers can reduce employee healthcare expenses by helping them choose a more cost-efficient plan.
Problem three: Suboptimal health plan choices disproportionately impact lower-income populations
The TIAA study also found that as compared to higher-earning employees, lower-earning employees are more likely to choose the wrong plan, miss out on savings, and then underinvest on retirement. Put another way: those with the least ability to afford it are the most likely to overpay on health insurance, which can contribute to widening health and wealth disparities.
Why does health plan decision support matter? It’s too hard for anyone to choose the right health plan, but it can be even more difficult for those with less time and resources. By providing employee decision support, employers can make it easy for anyone to choose the right health plan, and ultimately support health and wealth equity.
Problem four: Employees expect more support because of COVID-19
Generally, people don’t spend a lot of time thinking about their health plan options (over 90 percent roll them over every year). But this year could be different! Aflac found that nearly 50 percent of employees would like to spend more time learning about and selecting their health plan because of COVID-19. Employees also expressed a significant interest in benefits spending support and resources. Employee interest is anything but a problem, but employers could risk discontent if they don’t respond and provide more resources.
How does this relate to decision support? Simple: It answers employees’ requests for more support, and it can increase employee satisfaction with their benefits during a year when employees are more overwhelmed and frustrated than ever.
“If you could do one thing that would solve all of these problems, wouldn’t you do it?” says Coté. “Decision support is available, easy to implement, and cost-effective for employers. If you haven’t explored and implemented it before, now is the time to do so.”
Interested in learning more about communicating health benefits? Watch our recent webinar on managing Open Enrollment during a pandemic.
Overpaying and undersaving: Correlated mistakes in retirement saving and health insurance choices; The TIAA Institute; Leora Friedberg, Adam Leive
2020-2021 Aflac WorkForces Report
Only 4% of Americans understand important health insurance concepts, Policy Genius, Paul Sisolak