A successful open enrollment experience not only helps employees by getting them into the right health plan for themselves and their families and helping them improve their retirement savings, but can lead to savings for employers as well.
A tip sheet from Benz Communications cites a study by Aflac that shows 46% of employees take less than 30 minutes to make benefits decisions, and 89% of people choose the same plans as the year before. Benz says employers should suggest that employees block 45 to 60 minutes on their calendar to review benefits materials and an additional 30 minutes to actually complete enrollment.
“Research shows just the act of scheduling makes you much more likely to complete a task,” Benz says.
Benz also suggests simplifying communications. “Use communications to help workers see their benefits as an extension of their lives so that they can make holistic decisions. To do that, segment your communications to reach employees in various life stages or other demographic slices—for example, those not contributing to their retirement plan, or maxing out their health savings account (HSA). It’ll make your messages—and your plans—feel more personal and relatable,” Benz states.
Create a series of benefits tip sheets based on employee demographics. For example: “Benefits for your family,” “Benefits every Millennial needs to use,” “10 Best ways to make your HSA work for you.”
Simplifying communications involves breaking down unfamiliar and complex health insurance terms into straightforward concepts and simple equations so employees can see what they’re paying for coverage and why. “The reason people often zero in on per-paycheck costs is because it’s easy to understand. Deductibles and out-of-pocket maximums? Not so much,” Benz says. Give employees basic information to see how their plan choices affect their health and wallet over the long term.
Give employees the confidence and freedom to ask any and all questions they may have. Town halls, lunch and learns, benefits fairs—whatever it takes to make sure employees are well informed with accurate and actionable information.
Increasing Enrollment in Account-Based Plans
Employers are interested in increasing enrollment in consumer-directed health plans (CDHPs) paired with a tax-advantaged savings account in order to promote consumerism among employees and help lower overall health benefit costs.
In a webinar, John Young, SVP of Strategy & Consumerism at Alegeus, says the employer is the main factor of whether a program succeeds or fails. “Little changes can make a big difference,” he said.
Young says a study by Mercer shows among large employers, 53% are offering HSAs, but only 24% of employees are enrolled. In addition 83% are offering flexible spending accounts (FSAs), but only 32% of employee are enrolled. “There are enormous missed savings on table,” he says. “A study by Aite found only 17% of eligible out-of-pocket spending is flowing through tax-advantaged accounts.”
For one thing, employers must be knowledgeable about how CDHPs and tax-advantaged savings accounts work, according to Young. To educate employees, the employer, or whomever is communicating with employees, should know the differences in account types and how best to communicate with employees.
Jen Irwin, VP of Marketing at Alegeus, said to start early—two to three months before open enrollment—and communicate often. Communications should start with general education about account features and benefits then move to account comparisons to show which accounts/plan option are right for employees. Communications should also include contribution planning, helping participants decide how much they need to save (in addition to how much to save for long-term expenses); eligibility and spending, answering what employees can spend my funds on; and account tools that show what the employees’ experience will be like.
In addition to using multimedia channels to communicate, Irwin suggested employers use positive terms such as consumer-directed instead of high-deductible health plans. “Speak to the value of these plans, give examples and use interactive tools and quizzes to gauge understanding,” she said.
Young added that employers should show employees the money; help employees see the tax savings and balance that can be achieved with different savings levels and account investing; and for FSAs, show them how their contribution gives them money tax-free for health care but doesn’t cost them the full contribution amount in take home pay. He adds that the contributions to these accounts come out pre-Social Security unlike defined contribution (DC) plan contributions, and if coupled with investments, there is more potential for tax-free growth.
Irwin noted that Alegeus itself had a 90% shift in HSA enrollment due to an adjustment in premiums, adding employer funding to HSAs and FSAs, using an active enrollment process versus passive enrollment, presenting strong executive endorsement, holding mandatory meetings and enhancing communications.
Young suggested that employers disrupt their plan designs. Using a benefit-neutral plan design for the CDHP will make it more appealing to employees. By benefit-neutral design he means designing the CDHP so that it is equivalent in value as the traditional or employee’s favorite plan. ”Target out-of-pocket equivalency—if the out-of-pocket maximum is not same as the traditional plan, employee won’t participate,” he said.
Young cited a CIGNA study that found when a CDHP plan design is benefit-neutral, the plan will save 14% of benefit costs in the first year; utilization continues to dampen because people become more prudent over time. In addition, he said employer funding of tax-advantaged accounts is critical for driving adoption. Alegeus finds a 35% enrollment without employer contributions and 89% participation when employers contribute.
Don’t Forget the Retirement Plan
Alight Solutions says open enrollment is a good time to make sure employees understand and are taking advantage of all benefits offered to them, including retirement plan benefits.
According to Rob Austin, director of Research at Alight Solutions, few people take time to rebalance their retirement plan investment portfolio, yet experts recommend doing this at least annually. During open enrollment, employers can encourage participants to take time to evaluate whether their DC plan asset allocation aligns to their savings goals.
Retirement investing can be complicated and some workers may want professional investment help, Austin notes. More and more employers are offering greater help in the form of professionally managed accounts, and online or phone investment advice. During open enrollment, plan sponsors can remind employees of these options and encourage their use.
Open enrollment is also a great time to increase retirement contributions. According to Austin, about one out of every five workers who is saving to their DC plan is missing out on the full employer matching contributions. Remind employees that’s like leaving free money on the table.