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A new Private Exchange Research Council study shows why decision support and educational tools are necessary to help employees navigate the choice in benefits.
Decision support tools are influencing employee purchasing decisions, and employees are being thoughtful in how they spend their money, a new study suggests.
The Private Exchange Research Council (PERC), a think tank composed of private benefits exchange experts and top national insurance brokers and consultants, released a report showing that decision support and recommendation tools have a significant impact on employees’ decisions to purchase health insurance and other benefits on benefits marketplaces. The report is based on an analysis of hundreds of thousands of employee enrollments from 1,356 companies offering benefits through a Liazon-powered benefits marketplace between 2013 and 2017.
“Employers are increasingly adding employee choice and flexibility to their benefits program as a way to retain and engage talent, which is made possible through utilizing benefits marketplaces,” says Steve Nyce, director, Research and Innovation Center at Willis Towers Watson. “This provided an opportunity to look at the buying patterns of employees who have choice and flexibility to provide insights into employee behavior and to explore the impact of decision support tools in order to navigate that choice.”
Other key findings include:
“Over the past several years, employers have been looking for ways to move their employees to lower cost plan options but often see low movement to high-deductible health plans (HDHPs),” says Nyce. “In this model, we’re seeing that when given the choice and the tools to help educate employees about the value of HDHPs, employees are gravitating toward these plans. Further, employee satisfaction surveys show that employees are satisfied with their plan choices in this environment.”
Historically, according to Nyce, employers have provided their employees with a limited number of plan choices, narrowing down the options on behalf of their employees-a “one size fits most strategy”.
“As employers begin to broaden the amount of choice that their employees have within the benefits offering, there is concern over employees’ ability to make good decisions for themselves,” he says. “For example, will employees just pick the lowest or highest priced medical plan because they don’t know how to choose between plans? This research demonstrates that decision support tools help direct employees to the plans that are right for them and their families-rather than employers doing this on their behalf by selecting a small number of plan offerings that are best for most.”
When given meaningful choice and the ability to see the true cost of their benefits, employees purchase their benefits more efficiently based on their personal or family needs, according to Nyce. “This helps to improve the employees’ overall financial well-being as they’re able to allocate their benefits dollars to purchase the products and plans that will provide the best overall financial protection for their family based on their personal budgets,” he says.
Based on the study, Nyce has recommendations for healthcare executives: