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Consumers Need To Learn How To Drive Health Care Decisions

The American workforce is about to gain more control over its health insurance. Unfortunately, more control is exactly what most Americans don’t want. 

To help stem rising health care costs, employers have embraced the idea of consumer-driven health care more quickly than their workforce has. The “2013 Aflac WorkForces Report” (AWR) found that 72 percent of workers have not even heard of the phrase “consumer-driven health care.” Of those who had heard the phrase, 38 percent said they either don’t understand it very well or don’t understand it at all. And more than half (54 percent) of workers surveyed said they would prefer not to have more control over their health insurance expenses and options “because I will not have the time or knowledge to effectively manage it.”

When it comes to matters of financial security or health care, it’s fair to say that many consumers would prefer for someone else to take care of it for them, while another segment simply is not equipped to take ownership. However, the same Aflac study reported that only 13 percent of employers said educating their employees about health care reform was important to their organization, even though 75 percent of consumers expect their employer to educate them about this issue. This lack of communication not only exacerbates an already-dangerous information gap, but also forgoes opportunities to communicate benefits that can both satisfy worker demand and improve key aspects of the workplace.

In the midst of this confusion is an opportunity. Rising health care costs and the move toward consumer-driven plans are leading to a growing need for voluntary insurance products employees can purchase with their defined contribution dollars. Voluntary insurance plans can provide a much-needed resource in the face of a high-deductible health plan. The cash benefits these policies offer can provide additional safety and stability when workers and their families are shouldering an increasing amount of health care costs.


Consumer Unpreparedness

According to the AWR, more than half (53 percent) of employers have implemented a high-deductible health care plan (HDHP) in the past three years. Many experts characterize these as “entry-level” versions of the consumerism that defined contribution plans or state and private insurance exchanges will offer – meaning that instead of simply providing consumers with money to purchase health care services, they give them money to buy insurance altogether. A “2012 Employer Health Plan Study” by J.D. Power and Associates found that 47 percent of employers say they “definitely will” or “probably will” switch to a defined contribution health care plan.

As the remaining health care legislation is implemented, more employers will adopt consumer-driven health plans or shift completely to this model. This shift requires an entirely new degree of decision-making for consumers.

Meanwhile, the potential for increased medical expenses due to lack of understanding or mismanagement already is high. For example, according to the “2012 Aflac Open Enrollment” survey, only 30 percent of workers said that they always have a full understanding of the deductible costs when they select an insurance product. Another 15 percent did not check to see whether their coverage deductibles were correct or whether their preferred medical professional was in their network.

Workers have little understanding of how the new legislation might impact their lives and they have not prepared for such changes. According to the AWR, 62 percent of workers believed the medical costs for which they will be responsible will increase, while only 23 percent said they are saving money for potential increases. Only 24 percent of workers completely agreed or strongly agreed they will be prepared financially in the event of an unexpected emergency or serious illness.

The U.S. government predicts that household out-of-pocket health care expenses will reach an average of $3,301 per year by 2014. This does not include any other costs associated with taking time off work due to illness or injury. These predicted expenses can intensify the challenges of an already financially-vulnerable segment of consumers.

So why should this matter to employers? The costs of these issues can seriously impact a company’s bottom line. Employees’ financial difficulties translate to decreased job performance, absenteeism and dissatisfaction on the job. Nearly four out of 10 workers (37 percent) said they have experienced distraction and/or lost productivity at work because of financial or health problems. Consider that the Centers for Disease Control and Prevention states that the indirect productivity losses related to personal and family health problems cost U.S. employers $1,685 per employee per year, or $225.8 billion annually.

Voluntary policies – including critical illness, short-term disability, accident, dental, life and more – pay the policyholder directly for unexpected costs associated with serious illness, injury or loss. Since many of these costs are not covered by major medical insurance and families may not have extra cash for emergencies, voluntary insurance plans help provide a safety net to protect the policyholder’s assets.


Engagement Gives the Edge

Helping workers learn to manage their health care choices effectively presents an opportunity for employers to demonstrate that they care about their employees and to curb potential absenteeism, low morale and low productivity. Workers may well be the ones responsible for their health care decisions, but the wrong choices can affect their performance and state of mind in the workplace.

Adopting a communication strategy that includes multiple options is critical to reaching employees and their dependents. Some of the best practices for companies include:

  • Diversifying materials to encompass print, web, e-mail and face-to-face meetings.
  • Hosting multiple in-person meetings throughout the year.
  • Using social and mobile media such as texts, Twitter and Facebook to communicate key messages and to remind workers of upcoming open enrollment deadlines.
  • Simplifying the language of benefit communications, including clear explanations of health care jargon. Often, employees are embarrassed to admit they don’t understand concepts such as deductibles or copayments.
  • Providing an online benefits portal or platform where employees can have immediate access to their benefits plan.
  • Surveying the workforce to determine specific benefit needs and desires among employees.


Brokers also can help keep the lines of communication open by helping employers understand the degree to which employees want guidance – without which they may be inadequately protected. The current economic landscape, combined with a lack of basic knowledge about financial principles, has left many American workers financially insecure and with high debt. Companies must view their workers’ physical and financial well-being holistically and understand the costs of not protecting their overall health.


The Voluntary Opportunity

Rising health care costs, the connection between offering voluntary insurance and employee satisfaction, and the move toward consumer-driven plans all place additional financial burden on consumers. Voluntary insurance plans can provide a much-needed resource in the face of HDHPs.

Now is the time to remind human resource professionals and decision-makers that voluntary options soften the impact of inevitable cost shifting and rising out-of-pocket expenses on today’s workforce. Additionally, supplemental insurance enables employers to offer a broader benefits package to employees without adding to their own existing benefits costs.

The AWR found that benefits play a larger role in retention and recruitment than many employers may realize. In many cases, benefits may be the primary factor pertaining to employment decisions. Workers overwhelmingly agree that benefits influence job satisfaction, employer loyalty, work productivity and the decision to leave a company. In fact, 61 percent of workers surveyed in the AWR believe they’d be at least somewhat likely to accept a job with a more robust benefits package but slightly lower compensation.

The report also found that benefits play a role in keeping workers from leaving in the first place. Those who described themselves as “extremely satisfied” or “very satisfied” with their benefits program said they are three times more likely to stay with their employer, compared to those workers who said they are dissatisfied with their benefits program. Moreover, 69 percent of workers who said they are not satisfied with their current benefits package indicated that by improving their benefits package, their employer could entice them to stay, and 60 percent of employees say they would be at least somewhat likely to purchase voluntary insurance plans if their employer offered them.

According to the “2013 Aflac WorkForces Report,” nearly all voluntary insurance products on the market today have grown in popularity over the past three years. In fact, several of these voluntary products have doubled in popularity from 2011 to 2013. Findings from LIMRA show nearly 750,000 of the 1.3 million private U.S. employers offer voluntary options, making them available to more than 90 million full-time workers.

The LIMRA study also indicated that approximately 400,000 businesses are considering adding a new voluntary plan and another 120,000 are very much interested. Finally, 30 percent of employers said they are considering voluntary benefits as a replacement to employer-paid and contributory benefits within the next two years.

Amid massive changes in health care, what remains unchanged is the unequivocal role that benefits satisfaction plays in the welfare of the workforce, as well as the importance of voluntary products in a consumer-driven health care environment characterized by a financially fragile population. Increased need for supplemental insurance generated by consumer-driven health plans, along with a lucrative commission structure, ultimately will mean more financial opportunities for those who sell these products.


Ron Fields is vice president, broker sales and training at Aflac. Ron can be contacted at [email protected]

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