Younger Employees Becoming Savvy Health Care Spenders

A generational split on health benefits is being led by Millennials

Stephen Miller, CEBS By Stephen Miller, CEBS May 16, 2017
Younger Employees Becoming Savvy Health Care Spenders

There are major differences in how Millennial workers and their older Generation X and Baby Boomer colleagues view and use health benefits, new research shows.

"It's important for employers to understand differences in generational cohorts to better adapt to a changing workforce," said Paul Fronstin, co-author of an analysis published in April by the nonprofit Employee Benefit Research Institute (EBRI).

According to EBRI's report, based on a survey of over 2,000 adults with health insurance, Millennials:

  • Are more satisfied than older employees with their health plan choices—including high-deductible health plan options—in part because they are more likely to be healthier and to use health care services less frequently. Millennials are also more comfortable with plan selection and enrollment, which increasingly is through online platforms.

  • Are more likely to make cost-conscious health care decisions, such as seeking the cost of a procedure before receiving care. However, they are also more likely to request a brand-name drug over a generic. Based on these findings, Millennials may be more responsive to efforts to promote cost comparisons for health services, the report noted. Plan features likely to catch Millennials' interest include employer contributions to health savings accounts (HSAs), which can create a cash reserve for future health care expenses, and incentives to use cost-comparison tools.

  • Have the highest rates of regular exercise and normal weight, yet also are more likely to smoke. Plan sponsors may want to experiment with plan design elements such as a premium surcharge for smokers and offering tobacco-cessation workshops to decrease the rates of smoking among Millennials, the findings suggest.

Satisfaction with Health Plan Choices
(Percentage Extremely or Very Satisfied)

Millennial-health-1.jpgSource: EBRI/Greenwald & Associates, Consumer Engagement in Health Care Survey
(click on chart to view in separate window)

Receptive to Health Plan Options

Though Millennial-inspired benefit advice often focuses on ancillary options such as student loan repayment, maternal and paternal leave, and commuter benefits, a competitive health plan remains the top benefit to attract Millennial workers, said Alex Tolbert, CEO of Bernard Health, a health benefits consultancy based in Nashville, Tenn.

One in three Millennials has turned down a job in part because of poor insurance offerings, according to findings in a survey by Anthem, a provider of health and disability plans. 

"The important thing for employers who have a majority of younger, Millennial workers to know is that these employees will be more receptive to different types of health coverage than their more experienced counterparts," Tolbert said.

Given the trend toward higher deductibles, "employers have the opportunity to shape Millennial attitudes on health insurance, and with effective communication, offering HSA-eligible plans alongside traditional co-pay plans can significantly reduce costs," he noted. Healthy Millennials also "may prefer to fund their HSA than buy [higher premium] comprehensive coverage they don't expect to use."

[SHRM members-only toolkit: Managing Organizational Communication]

Financially Aware

"Money can be a huge cause of stress," leading to a range of health issues, said Mike Wozny, president of Anthem Life Insurance Co. “That’s why it is important to recognize financial planning as a part of a comprehensive, integrated health care plan.”

"Many Millennials definitely have traits and experiences that could serve them well when it comes to planning their finances," which includes managing health care costs, said Dennis Notchick, a certified financial planner with Safeguard Investment Advisory Group in San Diego. For example, "Many Millennials are good about creating budgets" and tracking their monthly expenses, having come of age during the Great Recession and the tepid economy that followed.

The fact they grew up in a time of fast-developing technology and are quick to adapt to the changes also gives them an advantage, Notchick said, including using apps on their phones—"a domain they're comfortable with"—to compare health care providers' quality ratings and comparative costs for nonemergency care.

Communication Tips

Five communication techniques to reach and motivate Millennials about their health benefits were suggested by Jessica Gonchar, a Seattle-based communications specialist at Milliman, a benefits consulting and actuary firm. She is also a Millennial worker:

  1. Personalize it. Generic communication, as simple and cost-effective as it may be, is not the most effective way to get through to any employee, let alone Millennials. Show them how plan options may specifically appeal to those in their age range, such as by choosing a high-deductible plan and contributing to an HSA to build up funds for future health needs.

  2. Make it convenient. Conveniences such as single sign-on for plan websites and embedded links in e-mails make best practices such as using a price-shopping tool for nonemergency health services more likely to happen.

  3. Go mobile. Mobile communication provides a handy platform where information tends to be read within three minutes of delivery. "Not everyone wants to receive benefit notifications on their phone, but providing the option allows employees more choice in the type of communication they want and increases the likelihood they'll read it," Gonchar said.

  4. Keep it compelling. Emphasize why the communication is relevant. Is there a cash incentive to participating in a biometric health screening? Will this program benefit an individual's health in the long run?

  5. Tell a story. Instead of sending an e-mail that simply lists the benefits of enrolling in an HSA or a flexible spending account, tell a story of an employee who has used the account, with specific examples of what can be purchased pretax and how it saved her money.

"Millennials want and need communication that is personalized, convenient, mobile-friendly so we can engage with it when and where we want, compelling so we know why it's important, and formatted in an interesting way," Gonchar said.

Related SHRM Article:

Employees Still Can't Find Out How Much Health Providers Charge, SHRM Online Benefits, April 2017

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