Helping Your Employees Pick the Best Healthcare Benefits

For most employees, choosing medical coverage for themselves and their families is among the most difficult decisions they’ll ever make. And the time and money employers spend on open enrollment to help workers make the right choices is no small undertaking either. But even with the best strategies for clarifying detailed, often complex healthcare information during this annual rollout of benefits, employers need to ask: How well do my employees understand their medical coverage, and are they making the right choices based on their needs?

Review studies on employees and benefits

Employers may assume that workers understand their healthcare plans, especially if they never receive any complaints. However, studies point to gaps between employees’ plan choices and their understanding of the coverage they selected. A 2019 survey by the employee health and benefits company Maestro Health found that a sizable number of workers — 35% — admitted that they either didn’t fully understand their healthcare coverage or knew nothing about it. What’s more, a 62% majority of the 1,000 respondents said that their employer wasn’t a good source of information for answering healthcare-related questions.

A 62% majority of the 1,000 respondents said that their employer wasn’t a good source of information for answering healthcare-related questions.

In an earlier study from the Guardian Insurance Company, 80% of the respondents said they understood their medical benefits, but a test of their knowledge revealed that only 49% fully understood their plans. As for employers, only 10% recognize workers’ knowledge gap, according to a 2018 HAS Bank white paper.

People often pay little attention to their insurance policies until they have questions about their coverage. In fact, a 2018 Unum poll found that employees spend less than 30 minutes reviewing their benefits, a practice that may explain why many don’t know as much about their healthcare plans as they could.

The high cost of providing healthcare and the risk of having fewer employees than expected signing up for benefits should compel employers to invest more time and effort in improving workers’ knowledge and understanding of their healthcare coverage.

Step 1: Decode “insurance speak”

Providing employees with a glossary of terms and definitions can help clarify plan provisions.

Employees may be familiar with the insurance terminology in their healthcare plan descriptions, but they may be confused about some of the meanings. Providing employees with a glossary of terms and definitions can help clarify plan provisions.

The Centers for Medicare & Medicaid Services’ website offers a comprehensive glossary of healthcare coverage and medical terms, such as:

• Deductibles
• Allowed amount
• Copayment
• Co-insurance
• Excluded services
• Preferred provider
• Balance billing
• Out-of-network co-insurance

Step 2: Comply with plan laws

The Employee Retirement Income Security Act mandates that anyone who administers a benefits plan must provide participants with a written explanation of the plan’s rules and operations, how it’s managed, and the financial information associated with it. Plan administers must regularly and automatically deliver some types of plan information to participants, while other kinds of information is available to participants through written requests.

ERISA protects plan participants and their beneficiaries, but as studies show, the law doesn’t guarantee that employees understand their healthcare benefits or make the right plan choices. Employers must go beyond ERISA if they want to make workers better informed about their medical plans, improve their experience as plan participants, keep healthcare costs down, and raise the overall quality of care.

The U.S. Department of Labor’s Employee Benefits Security Administration offers employers compliance assistance with ERISA.

Step 3: Improve employees’ choices

Avoid the one-size-fits-all approach to healthcare coverage and, instead, offer benefits that address employees’ unique needs.

The HR consulting firm Mercer advises employers to avoid the one-size-fits-all approach to healthcare coverage and, instead, offer benefits that address employees’ unique needs. Employers can help workers improve their plan selections by recommending that they factor in their personal circumstances or major life changes when choosing coverage, such as their:

• Medical condition
• Family size
• Finances and age
• Marriage or childbirth

Giving employees more control over their plans may be another way to help them better understand their plans. Employers can consider offering workers:

• Plan variety. A Mercer study found that employees prefer having multiple plans to choose from, usually as many as 5. However, cost may be a factor in how many plans an employer can offer.
• Pay options. One option is to give workers the choice of increasing the amount of money that’s withdrawn from their pay to cover medical copays or doctors’ visits.
• Plan bundles. Allowing workers to combine various plans to bridge gaps in healthcare coverage can give them more control over their benefits and help them better understand how their plans work.

Step 4: Respond to employees’ questions

Employers should be ready with responses to workers’ questions about their healthcare coverage. The most frequently asked questions vary by organization, but some of the most common inquiries deal with:

• Plan costs, eligibility, and operations
• Enrollment deadlines
• Differences in healthcare accounts
• Cost sharing
• Excluded services
• Out-of-pocket costs

Step 5: Fix open enrollment

Workers may feel pressured to review and select their healthcare plans within a limited time frame. Therefore, keeping open enrollment uncomplicated can help reduce employees’ stress. The change may require a tweak or a complete overhaul, but the recommendations are simple:

• Use technology, based on workers’ preferences (emails, texts, chatbots, intranets, infographics, etc.), to introduce the open enrollment process.
• Don’t overwhelm employees with too much information.
• Develop materials with clear, concise explanations of plan provisions.
• Include a benefits Q and A with frequently asked questions.
• Include plan comparison charts to help employers with their selections.
• Make more resources available to employees — which may include a dedicated staff person, benefits representative, or insurer’s website to field employees’ concerns.
• Promote the advantages of employer-sponsored benefits and how they contribute to employees’ total compensation to increase enrollment.
• Communicate benefits year round, not just during open enrollment.