The adaptation to health care reform has progressed through several phases, each unique in its dynamics and challenges for both employers and consumers.
According to the 2014 Aflac WorkForces Report, many companies were caught off guard last year and had to implement changes they hadn’t originally expected to make. For example, more than a third (36 percent) of companies that implemented a high-deductible health care (HDHC) plan in 2013 hadn’t planned to take that step, nor had 27 percent of companies that increased their employee copays.
Companies faced a number of decisions in 2013 related to the Affordable Care Act (ACA). These included offering employees health insurance through the new public exchange for small businesses (SHOP), giving employees a stipend to use to purchase their own choice of insurance through the government exchange and decreasing employee hours from full-time to part-time.
Going forward, the companies that are able to strike the right balance between profits and principle will be the most successful at leveraging benefits to drive good business. Agents who can coach companies to recognize the relationship between the well-being of their workforce and enduring profitability will also share in that success.
Years of tracking companies that dominate their industry and are branded as employers of choice has enabled the Aflac study to identify select game-changing strategies that certain companies use to recalibrate their investments in their human capital and strike this winning balance.
Strategy No. 1: Understand the financial and physical state of the workforce
Companies need to better understand the connection between the personal finances of their employees and the insurance choices they make. For instance, few American workers understand or acknowledge the impact of medical expenses on their overall financial health. In fact, an unprecedented number of workers face financial crisis today and are greatly underprepared for their future retirement. The reality is that for most workers, their health care costs have risen more than twice as fast as wage growth (1.8 percent) and four times as fast as inflation (1.1 percent).
Rising health care contributions take their toll on employee take-home pay – an issue that should directly concern today’s employers. Yet only 14 percent of companies believe that offering workers a comprehensive benefits package is a major influence on employees’ overall financial health. Companies will need to make other investments or changes to their benefit plans to help contain high medical expenses for workers and offer greater protection and peace of mind, especially since nearly 9 in 10 workers (86 percent) at least somewhat agree the medical costs for which they are responsible will increase as a result of health care reform.
These financial concerns result in lost productivity at work and can greatly affect a company’s bottom line. One-quarter (24 percent) of workers named “personal financial issues” as the top non-work-related issue that distracts them during the day, meaning financial issues are more distracting than even work or life balance issues.
Strategy No. 2: Retool benefits plans for a better competitive advantage
Employers must begin to examine the implications of health care reform decisions on benefits and workforce strategies, as well as the opportunities and risks that reform has generated. Employers need to track the outcome of changes to their benefit plans and recalibrate their plans to generate
value-creating options. For many companies, the impact of benefit plan changes will materialize in undesirable ways – including a more financially stressed workforce, loss of top talent and productivity declines among distracted workers.
Leading companies are taking this opportunity to make no-regret moves to ensure that their benefits and rewards programs continue to drive talent recruitment, retention, productivity and, ultimately, competitive advantage. These moves include:
Using benefits to drive employee engagement and organizational performance.
Using survey and research tools to determine the preferences of employees so that benefit plans emphasize what employees value most, while minimizing other features.
Tailoring plans to maximize what employees value most about employer-sponsored insurance beyond 2014.
Elevating the role of ancillary benefits in the company’s overall rewards program.
Employees do value benefits, and they can be a significant driver of both recruitment and retention. According to the Aflac study, nearly 6 in 10 workers are at least somewhat likely to take a job with lower pay but better benefits. Nearly half (48 percent) of workers say they are at least somewhat likely to look for a new job within the next 12 months, and of those workers, 41 percent say “improving my benefits package” would keep them in their job.
Elevating the role of ancillary benefits in an overall rewards program continues to prove valuable, as workers seek ways to cover out-of-pocket costs. More than half (52 percent) say they are at least somewhat likely to purchase voluntary benefits if offered to them. Workers are 30 percent more satisfied with enrollment methods when their voluntary benefits are included. They’re also 18 percent less likely to be distracted by personal financial issues when they’re enrolled in voluntary benefits, and 88 percent more likely to understand the concept of consumer-driven health care. Most important, workers enrolled in voluntary benefits are 50 percent more likely to feel they’re able to cope with unexpected medical expenses.
Strategy No. 3: Embrace the move toward consumer-driven plans
The health care system is complicated. Few employees have the medical knowledge necessary to evaluate provider quality, treatment appropriateness or medication needs. Nor do they have the information needed to understand the true cost of medical services. This lack of knowledge and information makes it difficult for employees to embrace and leverage the consumerism of health care.
Advocates for consumer-driven health care plans (CDHPs) state that these plans hold great promise for promoting patient-centered care and for reducing health care costs. For CDHPs to be successful, however, employees must be provided with the education, resources and decision-support tools they need to become effective consumers.
It will be important for employers to measure employee readiness for change – even a well-designed program will not be effective or successful if employees are not ready for it. Making a true assessment of employees’ readiness will help steer educational and marketing initiatives around new consumer-driven plans and may help determine the ultimate success of the launch of new plans – and even the participation rate.
According to the Aflac study, only 13 percent of workers strongly agree that their employer has prepared them well for the impact of health care reform, and 43 percent strongly or completely disagree that their employer has properly prepared them. Clear and frequent communication about what consumer-driven health care means and requires is extremely important, especially considering that most employees do not want more control over their health care expenses and options.
A 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, such as voluntary and supplemental offerings.
Strategy No. 4: Customize benefits options to generations and demographics
One size doesn’t fit all anymore. Demographic and generational dynamics necessitate tailored options and customized communications of those options. For instance, some companies offer their workers customizable worksheets to plug in their own individual information and calculate their potential medical costs for the year. Others hold informational meetings or make sure they diversify their materials to encompass print, Web and email, utilizing social and mobile media such as texts, Twitter and Facebook to communicate key messages and remind workers of upcoming open enrollment deadlines.
In designing benefits programs for multiple generations, it’s imperative to take a holistic look at each age cohort, including varying education levels, experiences, life factors and even personality characteristics. Each of these aspects plays a role in determining which options are best suited to a particular generation and, more important, which options appeal to those workers enough to drive participation and enrollment.
At no cost, and with minimal administration, an employer can provide a variety of levels and types of voluntary coverage to meet individual needs and life stages. Often, having these policies can save individuals from debt and may even prevent bankruptcy, helping employees focus on getting better and getting back to work. Supplemental insurance benefits pay for unexpected costs associated with serious illness, injury or loss that can result despite major medical insurance coverage.
Leveraging – not bracing for – the impact of health care reform
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. Employers need to find the right balance between profits and principle, providing health care options and benefits packages that take into consideration the tangible connection between workforce well-being and profitability. Brokers can help companies make those decisions – and ultimately ensure that workers have a financial safety net and peace of mind – by sharing the strategies outlined above.
Helping workers learn to manage their health care choices effectively presents an opportunity for employers to demonstrate 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.