Workscape Institute

If you’re trying to reduce the cost of healthcare benefits, remember that how you offer benefits can be just as important as what you offer

When you’re determining the appropriate mix of plans and plan options for employees, you’re forced to walk a very fine line between delivering benefits that will keep employees well protected and delivering the cost savings that your CFO is demanding… particularly in this economy.

Follow up:

In an effort to serve both needs, many employers are turning to consumer-driven healthcare plans (CDHP), attempting to boost participation in flexible spending accounts and encourage more employees to complete Health Risk Assessments. All of these strategies are great and can definitely lead to reduced healthcare expenses for employee and employer alike, but the quality and diversity of the healthcare options provided are only part of the equation. How those options are made available to employees and, more importantly, the quality of the enrollment and ongoing support experience is of equal or greater importance. I’ll focus on the case of CDHP adoption as an example.

In the rush to introduce cost-saving measures into the organization, CDHP adoption has been strong and is growing. According to a recent Workscape market study of 1400 HR professionals, just under half of all organizations surveyed offered at least one high-deductible option or was planning to do so within the next 12 months. (This number increased to over 50% for those organizations who employ more than 5,000 workers.) However, we’ve also heard anecdotally that many of these organizations are also somewhat disappointed with the participation rates in these plans.

From our perspective, the reasons for this are two-fold:

1. For many employees, CDHPs are a relatively new – and therefore unsettling – concept. This is particularly true if your organization has always offered the “traditional” $20 co-pay model.
2. If an organization is going to force employees to become better healthcare consumers, there is also a responsibility to provide those employees with the information they need to make well-informed decisions.

To improve participation in CDHPs – and to drive greater participation and higher contributions to flexible spending accounts – organizations simply must help employees to determine which plan is best for them and how much they should save to cover out-of-pocket expenses. Doing so will go a long way toward achieving the enrollment and cost saving goals you set for the organization and improve employee satisfaction as well.

The best approach is to make decision support tools (such as cost calculators, plan preference tools and other such resources) a fully-integrated part of the enrollment process. This “in-your-face” approach makes it easy for employees to leverage the tools as they select their benefits, ensuring that they’re making the right decision and that they’re making the most out of the resources you provide.

So as you strive to deliver the best possible plan mix for your employees and your company, remember that when it comes to reducing the overall cost of healthcare, the benefits experience is just as important as the benefits themselves.