Every year, benefit programs become more costly and complex. Many organizations are hitting a breaking point: benefit leaders see that employee confusion is holding back the value of their benefits package and even driving up costs. To help increase ROI, leaders are making strategic investments in year-round benefits education. Typically, they have two specific business objectives in mind.
The first objective is to increase the value that employees perceive from their existing benefits. The number of benefit programs companies provide seems to expand every year, yet many employees don’t understand what they already have. That leads them to under-value their benefits package as part of their total compensation. Rather than spending money on adding new benefits, many leaders (particularly CFOs) want to increase perceived value by better marketing what employees already have.
The second objective is to increase employee adoption of health insurance cost containment programs. Many organizations have deployed new strategies to contain health insurance costs, like limited networks and telemedicine. But they’ve also found that these programs don’t achieve their expected returns if employees don’t understand how to use them. It’s very rare that they really do. According to the Journal of Health Economics, 86% of people can’t even define all the basic terms that make up a health plan, like deductible, copay, coinsurance, and out-of-pocket maximum. Benefit leaders are investing in benefits education because they want these cost containment programs to achieve their ROI.
Don’t employees already learn about benefits during Open Enrollment? Yes, but it’s no longer working. As benefits became more complex, organizations tried to add more education into Open Enrollment. That made sense as a starting point because it’s the time of year when employees have historically been the most engaged in benefits. But in the age of short attention spans, the strategy has ceased to be effective and often does more harm than good. Cost containment programs require ongoing behavior change, and it’s simply impossible to change people’s year-round behavior from 2-4 weeks of intensive benefits communication. It creates information overload, and it’s only 8% of the year. Employees quickly forget about their plan design details and go back to their old, cost-driving habits the other 92% of the time.
To increase value from existing benefit plans and improve the adoption of cost containment programs, employees must be educated year-round. There are three goals to a benefits education program. We want employees to:
- Select the right benefits during Open Enrollment
- Value the benefits as part of their total rewards
- Use plans smartly to contain costs and get the best care
Open Enrollment was always designed to achieve the first objective, "Select.” A year-round benefits education program helps accomplish the other two objectives, “Value” and “Smart Use.” A typical benefits education effort consists of bi-weekly communications. The topics usually covered include:
- How to use the High Deductible Health Plan
- Importance of contributing to the Health Savings Account
- How to be an educated healthcare consumer
- When to take the Health Risk Assessment
- And much, much more.
After starting a year-round program, organizations observe changes surprisingly quickly.
For example, Fujifilm offers a great benefits package, but many employees asked questions during OE meetings that indicated that they really didn’t understand them. The Director of Benefits increased the frequency of benefits communications and implemented consistent marketing. Within a few months, over 90% of surveyed employees reported a greater appreciation for their benefits, even though nothing about the benefits themselves had actually changed.
At another customer, only 9% of employees downloaded the telemedicine app. Through our analysis of employee feedback, we discovered that another 40% had wanted to use it, but were unsure of how to download it. Armed with this data, we implemented a quick and simple solution - we made the link easier to access. Improved communication moves the needle on adoption, which allows these sorts of programs to have a real impact on claims data.
Once year-round education is launched, there are three kinds of success metrics organizations typically track to measure ongoing ROI.
- Percent of employees that engage on a quarterly basis
- Increase in employee awareness of specific benefits
- Increase in employee use of health care cost containment programs
Employers rarely build a detailed ROI model to get started with a year-round education program. More typically, organizations ask themselves the following questions:
- What programs and/or plan designs have you recently installed (or are planning to add) that could cause employee confusion? What are the consequences of that confusion?
- What are some specific cases of employee confusion from the last year or two? What were the consequences for the employee? For the company?
- What is the participation rate of cost containment programs like telemedicine and wellness? What impact would increased participation have on expected health care costs?
Once the above questions are answered, it tends to be self-evident that even one avoided ER visit more than pays for the organization's investment.
Once you have internal buy-in at your organization, the next step is to build an Annual Communication Plan, which will help you translate your goals into an actionable, year-round game plan. You can download a free template here.
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