Back to Basics—Helping Employees Understand their Plans

Imagine the plight of the average employee:

4%

of Americans could correctly define basic terms such as deductible, copay, coinsurance and premium


53%

Only 53% understand health care enough to read the instructions on a prescription bottle and realize when and how to take the medication


Anyone who’s been in this industry for any length of time knows that health care –and health care coverage– is complicated.

Worse, it comes with its own language—one that even benefits professionals struggle to understand.

This lack of health literacy—defined as the ability to gain access to, understand and use information in ways that promote and maintain good health—is costing your clients and their employees dearly. Individuals with low health literacy have average annual health care costs of $13,000, versus $3,000 for those with high literacy levels, according to one report by the National Bureau of Economic Research. The American Journal of Public Health reported that low health literacy costs the U.S. more than $232 billion annually. And another study found that 26% of U.S. consumers have both low health care system literacy and a high need for intervention. In fact, a recent report from UnitedHealth Group stated that improved health literacy could prevent 1 million hospital visits and save more than $25 billion (that’s with a b!) a year.

So What Does This All Mean?

Employees need help—and they’re turning to their employers as a trusted source. For example, the 2020 Edelman Trust Barometer showed that “my employer” was the most trusted institution for information about the coronavirus. Employees want to better understand their health care, want personal guidance, and want simple explanations.

How Can You Help?

Work with your clients to create a year-round communications strategy that encompasses both the basics—key terms and concepts—and ongoing education. Highlights of special programs embedded in the health plan, tips and tricks for saving money during the year, and reminders of important rules and deadlines will help employees understand their plan and how best to use it. Be sure to test communications materials before they’re finalized to make sure they’re accurate, clear and actionable.

Employees are increasingly asking for personalized support: DirectPath’s survey shows that 45% of respondents say more personalized benefits education would improve their health care insurance understanding. Yet only half of employers (54%) today are offering one-on-one benefits education, according to respondents. Consider adding year-round educational services, along with open enrollment support, staffed by benefits experts. Such one-on-one services—often provided telephonically—can help reduce the likelihood of poor decision making as employees choose, and use, their coverage. More than two-thirds of respondents who have had these one-on-one conversations rate them “very” or “extremely” helpful.

The Bottom Line

Health literacy and benefits education have a huge impact your client’s bottom line. In 2018, employers were contributing 72% of the cost of family coverage, and 79% of the cost of single coverage, for their employees. When employees select a richer plan than they need—which may carry a higher premium—both employee and employer pay more than necessary. Employee choices about where and when they receive care have a similar impact—the higher the cost of the service, the more the plan and the participant pay. Better, and more comprehensive benefits education helps individuals understand their health plan, which is the only way to know how to use it effectively.

As the famous song goes, “Let’s start at the very beginning…a very good place to start.” Sharing a glossary of key health care terms can help ensure that everyone—employees and family members alike—understand the basic terms and concepts to help them navigate the health care system and their coverage.

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