Benefits Education Aids Shift to Health Care Consumerism

Teaching employees to navigate among benefits choices pays off

By Stephen Miller, CEBS Mar 9, 2016
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Despite the postponement of the “Cadillac tax” on high-value health plans until 2020, U.S. organizations are continuing to make plan design changes to control rising costs, according to the 2016 Medical Plan Trends and Observations Report by consultancies DirectPath and CEB (formerly the Corporate Executive Board).

With the growing prevalence of high-deductible plans and other cost-savings strategies, such as the promotion of telemedicine and spousal-coverage surcharges, it’s up to employers to provide educational resources to help employees make smarter decisions in a changing benefits landscape, the findings suggest.

Cost-Saving Trends

The report, which analyzed more than 750 U.S. employee benefit health plans, found that employers are continuing to shift a larger share of the cost to employees, often through implementing high-deductible health plans (HDHPs). But deductibles for individual and family coverage continue to rise, regardless of plan type, according to the report:

  • 28 percent of organizations now offer HDHPs for both individual and family care.
  • Average in-network individual deductibles increased by 40 percent and family deductibles by 17 percent compared to 2015.

Other key findings of the report include the following:

  • Virtual care has broader acceptance. The usage of telemedicine is growing, with almost two-thirds of organizations either currently offering such a service or planning to do so by 2018.
  • Wellness incentives are on the rise. Almost half of employers provide some type of wellness incentive, ranging from $52 to $1,600 per year. Some offer a reduction in health insurance premiums of up to 10 percent.
  • Surcharges are becoming more common. Nearly 3 in 10 employers are adding surcharges, such as fees for spousal coverage and tobacco usage. Forty-one percent of employers have introduced or are planning to introduce spousal surcharges, and 21 percent of employers have imposed tobacco surcharges, which varied from $10.50 per month to $217 per month. Tobacco surcharges are more common than spousal surcharges.
  • Outpatient surgery is becoming cheaper. To ensure that employees don’t forgo the care they need, organizations are steering them toward cheaper alternatives by making those options even more affordable. In-network, the average co-pay for outpatient surgery fell in 2016 from $55 to $41, while the co-pay for inpatient surgery (requiring admittance to a hospital) rose from $40 to $67.
  • Emergency room co-pays increase further. The average in-network emergency room co-pay increased by 22 percent compared to last year, while co-pays for urgent care remained the same.

Providing Benefits Guidance

“There is no one silver bullet; no one has come up with one perfect solution to controlling health care costs,” said Lori Dustin, chief marketing officer of Birmingham, Ala.-based DirectPath, an employee engagement and health care compliance firm formed by a recent merger of legacy firms High Road and Enrolled Advisors.

“There’s a lot of concern that as high-deductible plans have become more prevalent, we have to teach our employees how to make better health care choices,” added Kim Buckey, DirectPath’s vice president of compliance communications. “Many studies show how employees look to employers for guidance and information on this, and we’re seeing that it’s missing in many cases.”

As an example of a successful benefits shift, Dustin pointed to a national retail chain with 14,000 health care-eligible employees across 200 locations in 15 states. “They were introducing three new high-deductible health plans and knew they couldn’t take the same approach of self-service passive enrollment. So they adopted an active approach that involved requiring at least 90 percent of employees be educated individually and confidentially for 30 minutes either over the phone or in person, if possible,” Dustin said.

The chain’s employees were educated about the differences between plans with a health savings account and a health reimbursement arrangement, for instance, “and the employer achieved a 69 percent participation rate in the new plans. The chain estimates it saved $1.5 million as a result and is now using the same intensive benefits-education approach when onboarding new hires.”

Telemedicine and Technology

The rising adoption of telemedicine “is due to leveraging interest in and access to technology, especially among younger workers,” Buckey said. “Those generations in particular are used to looking at a screen to find information, so there’s the convenience of being able to access health care through a device as opposed to going to the emergency room because it’s too difficult for them to see their doctor. But it’s going to take some time before we really see the impact of that.”

HDHPs on the Rise, with Millennials Top Takers

Over half of large U.S. employers (those with 1,000 or more employees) now offer at least one high-deductible health plan (HDHP), according to a February report by health care tech firm Benefitfocus, based in Charleston, S.C. According to the firm’s State of Employee Benefits 2016 findings:

  • 41 percent of employees select an HDHP over a traditional plan when given the option.
  • HDHP adoption is highest among Millennials, at about 44 percent.
  • Total premiums across both HDHPs and traditional plans averaged approximately $15,000 for family and $6,500 for individual coverage.

The findings are based on enrollment data for the firm’s client base, pulling from plan records at 500 large employers with more than 700,000 employees.

“Employers realize that their employees need more education and greater support to make an informed decision about HDHPs,” the report states. “Many are now using tools that provide personalization and context during the enrollment process to guide employees to the most relevant choice for their health and financial well-being.”

Stephen Miller, CEBS, is an online editor/manager for SHRM. Follow him on Twitter @SHRMsmiller.

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