September 7, 2016
With healthcare costs continually rising, an increasing number of employers are providing their employees with more choices when it comes to health insurance plans.
This is helping employers save money on insurance premiums, but it’s making the decision process more difficult for employees.
The key to helping employees make the best decision in a consumer-driven health plan is ensuring that they understand each of the available plan types and the terms that are commonly used to describe them. To most HR professionals, terms such as copay, coinsurance, HMO, PPO, HSA, FSA and out-of-pocket maximum are familiar. Your employees, however, might not be as well-versed in health plan definitions. Developing communications that educate employees or refresh their memories can help them to make the best decision when open enrollment rolls around.
When it comes time to enroll in plans, either at the start of a worker’s employment or during the designated open enrollment period, it’s important to give employees ample time to make a decision. This is an excellent time to offer educational resources that define plan terms and provide assistance to anyone who might have questions about how a plan works.
Beyond just understanding insurance terms and plan types, it’s vital that employees understand how to look at an insurance plan. Many tend to focus on the contribution to a plan — the money deducted from the paycheck each period — and simply chooses the most inexpensive option.
However, that doesn’t always end up being the best plan for the employee. Here are questions that employees should consider that employers could help answer.
What will my healthcare needs be in the coming year? This is often hard to predict since the definition of insurance is to provide coverage for an unexpected loss. However, if an employee has a chronic condition such as high blood pressure or is anticipating a surgery, they need to calculate the expected costs to determine which plan will cost them more money.
What are my contributions? In many cases the added cost of the “buy-up” plan will be the same, if not more, than the additional out-of-pocket expenses in a high-deductible health plan. However, in a HDHP, a deductible must be met first, which means the employee needs to consider the immediate cost of care; HMOs or PPOs normally include just copays.
Are there any employer incentives? In many instances, you, as the employer, may fund a portion of the employee deductible in a HDHP through contributions to a health savings account or health reimbursement arrangement. This may be tied to compliance with certain wellness initiatives. It’s important to ensure employees understand how the HSA or HRA works so that it is actually utilized.
Do all plans provide access to the same network? Plans you offer might include different provider networks, depending on the plan structure. In some instances, an HDHP might use a different network than that of an HMO or PPO. If an employee changes plans during open enrollment and is on a different network, they might be faced with additional costs if they see a doctor who’s not in the network.
In addition to considering a plan’s design and healthcare needs over the year, employees can also use transparency tools to make decisions about healthcare. Carriers are collecting data about drug costs across pharmacies and typical medical procedures across health systems to help employees choose where they fill a prescription or which hospital they choose for that knee replacement. This helps keep costs low for everyone.
Many benefits administration/enrollment platforms include decision-making tools that help direct the employee into the most appropriate plan, taking into consideration utilization, risk factors and individual financial situations.
Giving employees more choices about their health insurance provides that there are benefit options that meet the needs of everyone at your company, whether you employ 60 or 600 people. And educating them on how the various plans work can help them make a smarter decision and take a more active role in their own health.