The move to consumer-driven health care is a trend not just for hospitals and health systems, but also for the health benefits industry. For the 150 million Americans who receive employer-sponsored benefits, the decision-making is shifting from the employer to the employee. That means many of us are able to customize our health benefits packages to truly suit our needs, for example by using an online benefits marketplace product like Rally ChoiceSM.
A Transformative Era for Health Benefits
This new consumer-driven model of health benefits mimics an earlier shift in the benefits industry when pension plans were replaced by 401(k) savings plans in the early 1980s. While pension retirement plans were the gold standard for previous generations in the workforce, they are somewhat obsolete in today’s salaried jobs, with the exception of careers in the federal government.
For employers, 401(k)s became a more cost effective way to offer retirement to their workers that shifted the investment costs and risks over to the employees. For employees, they offer a way to choose how much they save and have control over their investments.
In a similar vein, the Affordable Care Act (ACA) has the health benefits industry moving towards models that are shifting the financial and decision-making burden to individual employees.
Traditionally, employers have offered employees a choice of solutions like health maintenance organizations (HMOs) or preferred provider organizations (PPOs). Today, approximately 40 percent of all employers and 92 percent of small ones offer employees only a single health insurance plan. For those employers that do offer several options, there is very little that distinguishes them — most plans provide the same benefits coverage at similar levels of cost.
Now, employers are beginning to use online marketplaces to provide employees with a more choices (including ACA plans through Federal and state exchanges), more comprehensive benefits, greater control over how much they spend, and the foundational education required to make complex benefit decisions. Employers are also encouraging employees to sign up for flexible spending accounts (FSAs) and health savings accounts (HSAs).
With the FSA and HSA options, employees have the flexibility to create personal tax-free health care accounts to use toward out-of-pocket medical and dental expenses, such as copayments or deductibles. These newer spending accounts allow employees the freedom to put as much or as little money into their health care account as desired, in contrast to paying the monthly premiums of traditional health benefits plans.
How Employers Can Reduce Health Care Costs
On the whole, employers strive to strike a balance between having a healthy workforce and keeping their health care costs down. A 2014 survey conducted by the RAND Corporation estimated that the US workplace wellness industry is worth $6 billion. Furthermore, a 2014 report by Fidelity Investments and the National Business Group on Health found that medium-to-large employers spent an average of $521 per employee on wellness programs in 2013, which is double the amount they spent five years prior to that. The hope by employers is that these investments in wellness programs will translate into greater productivity from healthier employees.
Common ways that companies aim to keep employees healthy may include offering free preventative health care services such as annual flu shots; hosting workshops on stress management and other topics; providing incentives for healthy lifestyle changes (like quitting smoking); or providing free or discounted gym memberships.
Just increasing benefits options isn't enough, though. An FSA or HSA-linked health plan can only save money if employees understand how to use them and have the guidance they need and the tools to shop for price-sensitive health purchases. Plus, making health a part of the workplace can be an important way to get everyone thinking more about healthy choices and preventive care. Besides saving money, healthy workplaces could potentially mean fewer sick days or hospital visits.
How Employees Can Reduce Health Care Costs
Employees can also take steps to help reduce their health costs and lower their premiums. One of the most important is to understand the health benefits. If you don't understand your benefits or want to learn more about money-saving moves, schedule an informational health benefits sessions, either in-person or by web conference. This is especially important during open enrollment time, because your decisions will stick for the whole year.
Additionally, new digital tools allow employees to learn about their benefits in detail, compare choices, and sign up online — just like shopping for airfares or mortgages. The best tools offer a guided experience that calculates actual costs on-the-fly. If your open enrollment process is still paper-based, ask your benefits team about newer tools.
An Exciting Time
We live in an exciting time with more options than ever before to help us become better health care consumers. RallySM has a full range of tools to help along the journey, from benefits choices and enrollment (Choice) to finding a doctor or hospital (Connect) to taking healthy steps every day and earning rewards (Engage).
A version of this article appeared in BenefitsPro Magazine, Dec. 14, 2015.