Employers turning to high-deductible health plans
As healthcare costs skyrocket, HR professionals and employees alike are dreading the start to open enrollment.
To combat 25% premium increases and fewer available exchanges, more employers are switching to high-deductible health plans as a cost-cutting measure. However, HR professionals are scrambling to prepare employees, who are already stressed out, for those changes.
Chicago-based software company The Jellyvision Lab commissioned Harris Poll to conduct an online survey of 2,105 full-time employees with company-provided benefits. The survey found that employees are stressed out by the changing insurance plans and confused about what HDHPs actually entail.
“For instance, 68% of employees whose company offers a high deductible health plan say the HDHP feels more expensive than other options,” says Jellyvision CEO Amanda Lannert.
WEX Health Chief Strategy Officer Jeff Bakke says that’s not really the case.
For example, an HDHP premium might be $200 a month cheaper than an HMO, but the out-of-pocket costs could be higher than an employee’s previous plan, Bakke says. The one-time hit causes the employee to think his plan is more expensive than an HMO or PPO.
An HDHP does involve more risk, which 30% of the survey’s participants noted; employees who don’t use their health insurance frequently spend less— and save their employers money.
“If you’re healthy and capable of saving the difference, you’re simply overinsuring yourself by getting another plan,” Bakke says. “You’re paying more [for a PPO or HMO].”
Bakke suggests that HR professionals go through the math with their employees come open enrollment.
“There are more organizations that are moving from richer benefit plans to a high deductible plan, and they come off as apologizing,” he says. “I think that’s never good.”
He says it is up to benefits professionals to explain, “Here’s the cost we would have shift to you in terms of premiums” and show how much an employee will save through direct and honest conversations about the risk of an HDHP.
“That’s been challenging for HR departments,” Bakke says.
The confusion among employees about what an HDHP is and how much it will cost underlies a greater problem for HR professionals: employees are uniformed and too stressed out to make a healthcare insurance decision that’s right for them.
About half of employees polled said that making enrollment decisions is “always stressful,” and 20% said they regretted the benefits choices they made, according to the survey.
“Every employee needs to understand how these plans work, because it’s where the majority is going to be,” Bakke says. “You can see a trend where 60% to 70% of the plans out there are high deductible plans.”
Bakke says another effective way to educate employees on the switch is to promote “the best part about what the employer is doing: paying a ton of money.”
“Most people have no idea,” he says. “Employers have shielded employees from these costs for so long.”
And with 67% of employees saying they spent effort learning about their benefits, it’s important for HR professionals to give “cost awareness” to employees.
“It’s not a question of ‘Will we ever go back to fully funded healthcare?’ Employers can’t afford it,” says Bakke. “It’s never going to happen.”