Eager to stay competitive in today’s job-seeker’s market, employers are offering more generous Total Rewards packages than ever before. But because many employees still don’t understand the value of those packages, they’re missing out on opportunities to save on healthcare.
Here are the most common bad benefits decisions employees make, along with some road-tested messaging about how to save on healthcare costs.
Mistake #1: Choosing the Wrong Plans
Employees are confused about their benefits—and 52% say choosing their benefits is stressful. That’s bad news for you, because employers waste $500 to $2,100 a year on each employee who chooses the wrong health insurance plan. With health care only getting more complicated and costly, it’s in your best interests to combat that confusion and make sure your employees are choosing the plans that will save you both the most money.
Speak in human, not jargon
Benefits info that’s heavy on jargon and legalese will only confuse and bore employees. And confused, bored employees are more likely to either keep doing what they’ve always done, or choose the most expensive plan just to “be safe.”
The good news is that offering simple employee benefits definitions can be the first step in combatting confusion. Those definitions should use clear, conversational language with a dash of humor tossed in…think of writing it the way you’d explain it in-person to a friend.
Personalize your messaging
Not all benefits are created equal, and each of your lovely employees are unique. That means they’ll also have their own personal needs when it comes to their benefits. By tailoring your messaging to fit each group’s unique pain points, you’re more likely to capture your workforce’s attention and get them to take action. This tailoring could involve adding call-outs in general content or creating standalone content for each group.
A few meaningful employee groups:
• Different demographics (Generation Z, Generation X, Baby Boomers)
• Union vs. non-union employees
• Recent hires vs. tenured employees
• Employees getting married or having a child soon
Give employees a really good benefits guidance tool
Interactive online tools (like ALEX) give employees clear, personalized benefits guidance tailored to fit their individual health care needs and circumstances. In fact, for many employees, interactive tools are even more helpful than talking to their HR team or colleagues: because the tool is private and unbiased, employees are more likely to be honest about their health care needs and less likely to be influenced by social bias, making it more likely they’ll make best choices for them. In fact, ALEX helped employees save a whopping $307 million in healthcare costs by choosing our recommended plan over the second-best option.
Challenge #2: Poor healthcare spending decisions
Healthcare consumerism has become a buzzword in the last several years, with the goal of giving employees more control over their healthcare spending. Butt most employees aren’t benefits aficionados, and still lack the understanding they need to make wallet-friendly choices.
On top of that, most companies don’t do a great job filling the knowledge gap—1 in 5 employees say they want more benefits education.
Share medical price-shopping resources
Websites like Goodrx.com help employees figure out which pharmacy in their area offers the best price on their prescription drugs, potentially saving them thousands of dollars a year.
Get serious about offering—and promoting—telemedicine
48% of Jellyvision customers said they’re focused on promoting telemedicine this year, and employees are increasingly open to the idea of virtual medical care. In fact, in a recent survey, roughly three-quarters of Americans said they would consider using a virtual visit for:
• A question about a prescription
• A pre-surgery appointment
• Ongoing care for a chronic condition
When it comes to promoting your telemedicine tool, focus on what’s in it for the employees rather than the bells and whistles of the technology. Emphasize convenience (ex. “you don’t have to get off your couch when you’re sick”) and pricing (ex. “a telemedicine visit costs you a fraction of what an in-office visit does”), and put that info front and center in all the HR resources your employees turn to when they get sick.
Urgently promote urgent care
One of the most common—and expensive—ways employees misuse their healthcare is by going to the emergency room for non-life-threatening illnesses. That comes down to the fact that many of them don’t realize that they’d get much cheaper—and quicker—care at an urgent care center.
Use this article to whip up a comparison chart for your employees, making sure to include where to go for common illnesses or injuries. Be sure to give them a shortlist of all the urgent care centers in your area: that way, there’s no question where your employees should go at the critical moment.
Challenge #3: Low HSA engagement
Fact: Only 11% of employees say they understand their HSA, and 56% of employers say HSA education is a primary concern. That’s bad news, because health savings accounts are one of the smartest ways employees can save on medical expenses.
Part of the challenge with boosting contributions is that some employees need more help understanding how health savings accounts work. The real problem, though, is ineffective employee communications.
Beat the tax savings drum harder
It’s simple: When people pay for healthcare out of their HSA account instead of their bank account, they can save hundreds if not thousands of dollars in taxes. So it’s your job to make those somewhat abstract tax savings feel as tangible to your employees as a handful of cash. Using the average tax rate (19.65%) as a benchmark, list out how much employees stand to save by contributing at different levels ($1,000, $2,000, etc.). And if you feel a “fear of missing out” message might be more effective, frame those savings as something employees will lose if they don’t act.
Bottom-line messaging works: after talking to ALEX, employees said they would contribute an average of $2,620 to their HSAs—36% above the national average of $1,921.
Emphasize the important difference between FSAs and HSAs
There are a few big differences between FSAs and HSAs, but employees might not realize that.
Unlike FSAs, HSAs have no “use it or lose it” date. The money employees put into their HSAs will stick with them until they need it, whether it’s this year, next year, or twenty years from now (even if they change jobs or retire). So be sure to proactively call out the difference everywhere you mention HSAs. Assume there’ll be confusion if you don’t.
Make your messaging more timely and frequent
Your employees can enroll in—and contribute to—their HSA at any time throughout the year, so don’t wait until open enrollment to bring up HSAs. Reach out consistently, whenever your employees are best primed to care: at the beginning of a new plan year; in March and April when tax savings are front of mind; or after a pay raise or promotion.
Challenge #4: Low 401(k) contributions
Not all your employees are in a position to contribute generously to their retirement accounts because they’ve got other, bigger, financial fish to fry.
But many who can and should boost their retirement funds…just don’t. What’s worse, 4 in 10 employees said they’re now saving less for retirement in response to the economic downturn. As a result, they miss out on free money and become less prepared to retire on schedule (which isn’t great for you, their employer, either).
Focus on best-in-class financial behaviors
Many employees equate meeting their employer match with a really good contribution rate. But in most cases, merely meeting that match isn’t going to be enough for them to reach their retirement goals. To counter this assumption, make clear what the top 5-10% of contributors (at your company, or nationwide) are doing before sharing national averages (which will obviously be lower). (Why mention the high achievers first? Because we humans have a tendency to be influenced more by the first of a series of options, known in the world of behavioral economics as “anchoring”.) If you aren’t intentional about what behavior you anchor your employees on, they’ll default to something less than ideal…like that employer match.
Share basic investing FAQ’s
Contributing to retirement funds is important, but if your employees aren’t investing those funds wisely, they’re going to fall short. Handing over the brochures your 401(k) vendor won’t help, since they’re usually packed with jargon and legalese. So it’s up to you. Be sure to use conversational, simple language to answer common investing questions and define basic investing terms (like compound interest) for your employees.
Describe future retirement funds as monthly income
Getting people to do things now that will benefit them in the future is…difficult. Right now is so real and vivid, and the future is not.
To give your employees a stronger feel for the way their current retirement fund decisions will impact their quality of life when they’re retired, do more than project various lump sums they’ll have access to. Instead, break down those lump sums into monthly income spread over, say, a twenty-year retirement period. Most employees know what their monthly income now is, so that number will give them a more visceral understanding of how comfortable—or not—they would be.
Challenge #5: Low financial wellness program engagement
Convincing your employees that you, their employer, are the ultimate authority on credit card debt or creating a household budget is an uphill battle. Even if you do see decent engagement with your financial wellness resources, it’s nearly impossible to know if they’re working; to gauge success, you’d need a statistically relevant chunk of your workforce to track their financial behavior and turn over their ATM receipts. And that…isn’t going to happen.
Make finance-related benefits guidance part of your financial wellness platform
Tax-savings accounts and retirement plans are financial products that carry the same complexities and consequences of any sophisticated financial product. However, they’re generally handed over to employees with a confusing vendor pamphlet and login instructions.
Consider swapping out a financial wellness program focused on employees’ take-home pay for one centered on helping them take advantage of payroll deductions in a way that makes the most sense for them. When employees automatically save money before it reaches their paycheck, it’s (unsurprisingly) much harder for them to spend it. And as their employer, you control that spigot, so you’re in the perfect position to lead the way.
Provide advice that weighs all of your employees’ financial concerns
The problem with the financial advice HSA, 401(k), and Financial Wellness vendors provide is that:
1) it’s heavily biased towards their product,
2) doesn’t explain how different tax savings products relate to each other, and
3) doesn’t factor in employees’ many other financial priorities (like, say, trying to pay off college and credit card debt, save up for a down payment on a house, or sock away a rainy-day fund.)
Companies that offer holistic, vendor-agnostic advice help their employees in a more meaningful way and also give themselves a leg up when it comes to recruiting and retention in this highly competitive talent economy.