A recent survey from Aflac found that, in spite of reporting their medical copays and other out-of-pocket costs are more than they can afford at times, many employees said they would rather clean their toilets or complete their tax returns than research their benefits.
According to the survey, premiums and provider availability are the top considerations for employees when selecting their health benefits, while fewer than two in 10 consider out of pocket costs.
“It continues to be a problem that people don’t spend time researching health plans,” Seth Ravine, chief revenue officer at Acclaris, a provider of technology and services for consumer-driven health care and reimbursement accounts, tells PLANSPONSOR. “With the ACA a normal part of business and as they approach the 2018 Cadillac tax, employers are under more pressure to manage costs and give a variety of benefit options to employees so employees can spend their money wisely on the right plan for them. This dynamic creates more confusion and complexity, so tools and calculators alone won’t be enough to educate and guide employees.”
When selecting the best health plan package, consumers should be evaluating the options based on four factors: themselves, the plans, the market and the financial ramifications, Acclaris says. The final, and possibly most important, point to consider is how they plan to finance the costs—consumers need to start taking a financial approach to health plan decisions, weigh the potential costs and risks and choose the plan option that fits best into their current financial situation. A 20-year executive nearing retirement should be choosing a very different health plan than a 20-something store clerk.
NEXT: Simplifying and personalizing employee education
Where an individual is in life determines how they consume health care, Ravine explains. He notes that providers of private exchanges have found that people choose to buy down on benefits design, taking a higher health care deductible for a lower premium that may not match their life stage. For example, someone getting older for which health issues are more common or a person who is starting a family may want to pay a higher premium for a lower deductible, whereas a 20-something in good health may not. “The question is, do they have the finances to cover out of pocket costs?” he says.
“The pace of complexity is outweighing education for employees right now,” Ravine adds. “Acclaris wants to focus time on not just bringing tools to the marketplace that are predictive and proactive. Employees are getting the same overload of tools and sales pitches, but no user experience.”
Plan sponsors need to continue to tailor education to the consumer level, helping people understand their unique questions and put them into a predictable model, he suggests.
As another example, Ravine shares that if someone has a medical procedure and submits a claim to a health savings account (HSA) to pay for the out of pocket costs, 99% of the time, taking money out of the HSA at that time is not the most prudent decision. “As long as they have that receipt, they can get the money from the HSA. It is wise to leave the money in there to grow tax free,” he says. “They need to ask if the charges are accurate, whether they can negotiate charges with the health care provider, do they want to pay the bill from their own personal account, take a loan, finance it with the provider, or use a flexible spending account (FSA) or other reimbursement account, and what the implications are for their long-term finances.”
In a recent Acclaris survey, nearly one-third (32%) of respondents identified understanding when an HSA can/should be used as the most critical gap in consumer knowledge. Understanding which expenses are reimbursable (20%) and knowing when to use health care accounts (18%) were also identified as top gaps.
Employers and health benefit providers should simplify this for participants, Ravine suggests. And, they should stop using ‘health care speak.’
“Individuals can start making smarter financial decisions for their life stage if they plan for health care. Their ability to maximize financial decisions makes their lives better,” Ravine concludes. “Employers who help with this will have happier employees, lower costs and more efficient use of health care benefits.”