Benefit Tech Tools Aim to Turn Employees Into Smart Shoppers
Health care consumerism—a movement to empower employees with information to help them choose plans, providers and treatments—is giving rise to online decision-support tools that assess the best benefit plan for their needs.
Few industry watchers took notice last year when Automatic Data Processing Inc. bought a small North Carolina-based developer of employee benefit decision tools. Yet the September 2011 acquisition of Asparity Decision Solutions appears to be a savvy move for the human resources software and services company as more organizations look for ways to turn employees into smart health care shoppers.
The trend toward health care consumerism—a movement to empower users with information to help them wisely choose plans, providers and treatments—is giving rise to online decision-support tools that help employees find the best benefit plan for their needs. A growing number of companies including PepsiCo Inc. and oil-recovery firm Safety-Kleen Systems Inc. which is an Asparity customer, are offering them. In fact, about 65 percent of employers provide these tools, a 2012 Towers Watson & Co. survey shows.
With annual health care insurance premiums costing about $15,000 for a family of four, according to a 2012 survey by the Kaiser Family Foundation, it is likely the priciest purchase an employee can make in a given year, aside from buying a house, says Tim Clifford, vice president of benefits services for ADP, which is based in Roseland, New Jersey. "Yet we dive right in and say I'll buy the one I bought last year," he says.
Not surprisingly, employees can find the benefit-enrollment process overwhelming. More companies are asking workers to pay a greater share of the costs and presenting them with new plan choices, such as high-deductible health plans, which can be complicated and confusing.
"You're asked to do more at work and suddenly you're being asked to take more responsibility in this area, and people are shutting down," says Joann Hall Swenson, health engagement consultant at Lincolnshire, Illinois-based Aon Hewitt. "It's complicated and we haven't had to think about that in the past, and now suddenly employers want us to be good consumers. Keeping it short and simple is really critical."
Most employees are on autopilot when it comes to benefit-plan selection, shows a recent survey by insurance company Aflac. An overwhelming number—89 percent—say that they elect the same benefit options every year. And that lack of engagement can cost $750 a year—the amount that more than half of the 2,000 workers surveyed estimate they waste each year by choosing the wrong benefit plan. On top of that, only 16 percent of workers were confident about their benefits choices in 2012 compared with 24 percent in 2011, the survey shows.
Clifford says that providing decision-making support, like Asparity's suite of online tools, is critical in helping employees make the right choices. The program ranks and compares health plans according to individual needs and preferences.
Federal employees have been using Asparity since 1998 to help them choose from among 20 medical-plan options, including dental and vision care. The Durham, North Carolina-based company began offering these tools to private-sector employees in the early 2000s, company officials say.
The tools guide employees through the decision-making process starting with a survey of how many times in the year a user expects to incur charges for various services including routine office visits, outpatient surgery and X-rays. From there users pick the health-plan features that are most important to them and the program ranks the plans according to price and provides a detailed comparison with estimated out-of-pocket costs. It allows users to make tradeoffs between one feature and another, such as no copayments versus a certain coverage level for chiropractic care.
"Without a decision-support tool, employees will go into a system and choose Plan A or B, but it's very hard to compare the plans and see all the difference in costs in all these choices," Clifford says. "You need to know based on [your] … situation healthwise which one of these plans will have higher or lower out-of-pocket costs. These tools have cost calculators so you can input your anticipated health history and the tool will stack up the different plans as well as show you the contribution rate."
The goal of these tools and of health care consumerism in general is to overcome the biggest challenge to controlling health care costs—changing employee behavior.
"Employers been tinkering with wellness programs for years and experimenting with different ways to control costs, but at the end of the day changing behaviors is at the root of how health care costs are driven and that's what we are trying to get at," Clifford says.
Rita Pyrillis is Workforce's senior writer. Comment below or email firstname.lastname@example.org.