Buy groceries or get medical care? Educating employees on benefits will help them do both

Educating health plan members on two very related issues remains a major challenge for employers as they seek to provide a truly effective benefits package for their workforce.

The issues – understanding the benefits package, and using it prudently to protect and improve their health – have long eluded most plan members. Now, a new survey by benefits platform vendor Elevate underscores the urgent need to ramp up plan member education on those critical issues.

The survey – the State of Employee Benefits Decision-making – gathered input from plan members working for companies with at least 2,500 employees. What emerged was a tale of employees battling rising costs at home while worrying about the cost of their health coverage. They are forced to make almost daily decisions such as whether to buy food and stay current with household bills, or pay for health coverage that would benefit them greatly in the long run. Many are choosing to forego regular health care–even when they don’t have to pay for it.

The reason for this, says Elevate co-founder and CEO Brian Cosgray, is simplicity. As in, simplicity gets short shrift when it comes to communicating the value of benefits to plan members. Too many plan members don’t even know the full range of their benefits, he says. Nor do they understand that many benefits are cost-free to them. Plan sponsors, frustrated by this knowledge gap, end up paying the price for this legacy of poor benefits communications.

Elevate’s survey sharply reveals how confusion about member benefits has led to plan members making  diametrically opposed spending choices. The economic reality today forces plan members to make spending decisions that pit their health against maintaining their standard of living. But the survey found that plan members are foregoing free or low-barrier primary care services as part of the belt-tightening strategy.

For instance, consider the following high-level survey results:

• 65% are looking to cut discretionary spending, focusing instead on necessities.
• 28% of employees put off a screening or wellness check.
• 14% postponed a necessary medical procedure or delayed filling a prescription due to financial constraints.

“The workforce is financially stressed, and this is leading to potentially poor decisions that may undermine people’s physical, emotional and financial welfare. These decisions not only impact individual employees but also influence employers in areas that can underpin organizational success—workforce productivity, retention and engagement,” the report says in its introduction.

For instance, 58% said they have switched to purchasing less expensive, lower quality groceries to save money. Almost a third said they dropped health club memberships to cut household costs. Two-thirds have reduced discretionary spending, and 10% have eliminated all discretionary spending, which generally includes dining out, entertainment, and other activities designed to reduce stress.

Reducing discretionary spending and the weekly grocery bill makes sense when money is tight and getting tighter. But failing to take advantage of basic health plan benefits such as screenings and wellness check-ups, which are usually free or come with a low co-pay, is harder to fathom. These reactions indicate that plan members do not yet understand their benefits.

Related: Workers are financially stressed (and employers have an essential role to play)

Health savings accounts, flexible savings accounts, and health reimbursement accounts remain Exhibit A for poor plan communications. Plan sponsors continue to be unsuccessful at steering their members to tax-advantaged coverage that would clearly save money on health care for members in the short run, Cosgray says.

Plan members interviewed for the survey say their greatest fear was not being able to afford out-of-pocket costs associated with medical care. Yet they aren’t making plan choices that would help them meet those costs.

“Employees aren’t preparing for some inevitable out-of-pocket costs—even though they feel it’s important,” the report said. “Most aren’t using the tax-advantaged accounts available to them, depriving them of tax savings and potential employer seed money that could help address financial stress.”

Plan members get confused about how such plans work, Cosgray says, and most of the “explanatory” material included in their benefits package only makes the distinctions among the plan types more obscure.

“No one takes the time to educate the members about these types of plans. You look at it and go, ‘You know, the juice isn’t worth the squeeze, right? It’s too complicated.’ But it shouldn’t be. Most sponsors just don’t know how to simply explain the advantages of various plans,” Cosgray says.

The result: plan members who would greatly benefit from an HSA type plan steer clear of them, to everyone’s detriment.

This misunderstanding has a cascading effect on plan member health and finances.

“Concern over out-of-pocket costs may be driving employee decisions around medical care that could have catastrophic consequences in terms of people’s health and finances. This is clearly a tradeoff no employer wants an employee to make,” the report said. “The fact that more than a quarter of employees postponed wellness visits and screenings is also concerning. Employees don’t understand how their benefits work and are missing out on exactly the types of care that help safeguard their health and finances in the longer term.”

Elevate deploys common language, simplicity of process, and AI technology to enhance benefits communications. The reimbursement experience for out-of-pocket plan member costs was one area of particular focus.

“People want to be reimbursed immediately. They don’t want to wait weeks,” Cosgray says. “We debuted a system that uses AI technology, so that somebody can literally just take a picture of a receipt if they have to pay out of pocket for something with their phone. We read it instantly, and we can reimburse them instantly instead of waiting for days for a human to read it and send them a paper check. The promise is: If you do have to pay out of pocket, you get that money back as quickly as possible.

“But you have to make it easy to understand. It’s still hard for people to understand what they can use these benefits for and what they can’t. And, that’s kind of our other passion–making benefits easy to understand.”

Another process simplification: Elevate puts all member benefits on a single card. “You shouldn’t have to carry three or four cards in your wallet and know which one to use. That’s just a frustrating experience,” Cosgray  says.

The challenge to increase plan members’ health literacy and to support them in making better plan choices may not be as daunting today as it once was, the survey results suggest. Four of 10 respondents said they have had experience with an FSA or HSA, and another quarter of respondents said they “would like to use a tax-advantaged healthcare account but feel they can’t afford it.”

All they need now is for someone to explain to them how it works. And as more tools and benefits platform plug-ins like Elevate emerge to facilitate the communications task, employees who want to make better choices may finally be empowered to do so.