Your overloaded benefits plan is a waste of money

As HR professionals work through another enrollment season in the shadow of the coronavirus pandemic, many companies are offering more benefits than they ever have before. But those benefits are going largely unused, and are costing your company in wasted healthcare spend.

Benefits software company Jellyvision found that 98% of employers plan to add more benefits in response to COVID, yet those same employers said that more than half of their benefits dollars were wasted on employee confusion over enrollment.

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In order to maximize utilization and lower healthcare costs, employers should step back from their new role as healthcare providers and allow third party vendors to do the heavy lifting, says Helen Calvin, chief revenue officer at Jellyvision.

“It is a huge burden and they need to be able to go back to being what HR was originally supposed to be, which is talent management and talent optimization,” she says. “It’s also critical that you are utilizing vendors for whom this is where they spend their time and their focus, on benefits, elections, and benefits enrollment.”

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Calvin sat down with Employee Benefit News to discuss the changes in the employer-employee relationship and what employers can do to reduce healthcare spending by relying on their supplementary benefits.

We're going into our second open enrollment season since the pandemic started. How has the relationship between employers and employees changed when it comes to their expectations for their benefits experience? 
There's a push and pull happening where employees are turning to their employers for help and benefits in areas that you might never have sought from your employer before. Mental health is one of the biggest examples of employees seeking help from their employer, whereas that wouldn’t have been something you would have asked about before. It's really great that the door is open and employers have lots of new ways that they can support their employees and create a really engaged, productive and talented workforce. But the downside of that is it's a burden on employers — they're becoming almost healthcare companies in and of themselves and the costs can be very high.

Helen Calvin, CRO at Jellyvision

The proliferation of the benefits that employers are trying to offer to support their employees and also reduce their healthcare costs have really expanded, and employers are now thinking, ‘How do I actually get employees to start to utilize the digital health tools or healthcare navigation tools or new benefits I'm offering?’

What are some of the challenges employers are facing by offering so many benefits that are being unused by employees? 
I don’t think the pandemic fundamentally changed where employers were with their employees in regards to benefits. It was more like gasoline on the fire. Employers have been on an unsustainable trajectory of increasing benefits costs year over year. It wasn't working before — the combined medical debt currently in the United States is $140 billion. It’s the number one reason, even before COVID, for people to declare bankruptcy in America. Adoption of our benefits and benefits engagement wasn't happening in the “before times” either. So even if the world moves back to normal from a workplace perspective, the systems that were in place before weren’t solving the problem.

In a lot of ways, these benefits might actually reduce your overall costs, but the issue is getting employees to know about it or have them be engaged with it. We asked the C-suite what percent of their businesses' annual healthcare spending they thought was wasted due to employee confusion over these proliferated benefits. And they said 53% of their healthcare costs were being wasted.

Employees are asking for more benefits, and employers are offering them. Where is the missing link when it comes to getting them to actually engage? 
The traditional communication approach has us talking about open enrollment on an arbitrary timeline, or we use triggers throughout the rest of the year. For example, during mental health awareness month, I’m now going to communicate to you your mental health benefits. But people just don't care until they care. They're not necessarily thinking about their benefits on the timeline that we're trying to operate from.

The other side of it is that employees have a natural distrust of their providers, the vendors, the administrators, of the entire ecosystem that we have built around these benefits. So employers really have to find a way to talk to employees transparently and honestly, and show them the math behind these benefits choices in a way that's really guileless. With Alex, our AI-powered online benefits counselor, when we're talking about the medical plans, we gather information from employees about their expected medical costs, and then map that out against the different plan designs to really show employees the trade-offs and costs they’ll see with that medical plan. For example, a high deductible health plan may cost less, but they have to pay more in upfront costs. So having those kinds of dialogues and conversations with employees that help them really get a better understanding of what decisions they're making will help them understand how it will impact them.

How will those conversations lead to higher engagement in the open enrollment process? 
The big key is adoption of these ancillary benefits. Typically, 84% of all the health spending on an employer population is driven by about 20% of the employees, which is [on average] $24,168 per year on an employee. Historically, so much of that was driven by the medical plan and that’s still happening, but if you reframe your open enrollment not to be a task but a plan-year strategy, then you can stop just focusing on medical and dental, and you can really start to highlight some of the other benefits, like your telehealth providers, or maybe some of your digital health tools. That planning moment of open enrollment is a really key entry point.

How would you advise HR leaders and benefits professionals to adopt this plan vs. task mindset? 
I think brokers and broker consultants can be incredibly helpful in deciding what are the strategic benefits we're going to focus on for this year. It’s also critical that you are utilizing vendors for whom this is where they spend their time and their focus: on benefits, elections, and benefits enrollment. Technology adoption is also so critical, especially as you think about a post-COVID world of open enrollment needing to be 24/7.

Employees are willing to let their employer help them get the most out of their benefits, which behooves both the employee and the employer, but employers have to start to seek third-party support in executing it because it is a huge burden and they need to be able to go back to being what HR was originally supposed to be. How do you use the experts in this space, digital tools, and partner consultants to relieve the burden?