An overwhelming majority (91%) of working Americans “strongly agree” or “agree” that when it comes to selecting their health or medical plan each year during benefits open enrollment, they typically select the same plan from the prior year.
This was among the findings from a new consumer research survey released Wednesday from Voya Financial detailing decision-making behaviors driven by working Americans during the annual workplace enrollment period.
Heading into open enrollment season, Voya’s research sought to further understand how employees are engaging with their benefits and the decision-making involved in their annual enrollment selection. While the research shows that inertia plays a role for employees in making benefits changes, having the tendency to select the benefits they enrolled in previously, Voya’s data also showed nearly half (49%) of benefits-eligible employed Americans spend less than 20 minutes reviewing information related to their workplace benefits during their employer’s open enrollment period.
The good news is 79% of employees “strongly agree” or “agree” they will spend more time reviewing their employee benefits options and coverage than they did during the last enrollment period.
“The workplace annual enrollment period is the one time of year employees can review and engage with their employer’s holistic benefits package, which should not be taken lightly,” said Nate Black, VP, Health Solutions Product Development at Voya Financial. “While it’s encouraging that most employees will be spending more time reviewing their options this year, now is also the time for employers to be engaging and communicating with their workforce about the value of the solutions they offer.”
‘High Deductible’ naming creates decision-making bias
When it comes to overall health plan selection, two of the most common plans employers offer are the Preferred Provider Organization (PPO) and the High-Deductible Health Plan (HDHP), where a PPO will typically offer a lower deductible with higher premiums and a HDHP offering higher deductibles with lower premiums.
While HDHPs are often paired with a tax-advantaged health savings account (HSA), which enables the accountholder to contribute pre-tax funds to use toward eligible health care expenses, the “high deductible” name of the plan has proven to create biases for individuals who may not fully understand the plan’s benefits. According to Voya’s research, working Americans are almost three times more likely to choose a PPO over a HDHP when the plans are labeled their branded names of “Traditional PPO” (74%) and “High-Deductible Health Plan” (26%).
However, when plan names are unbranded, removing “high deductible” from the plan name, the preference gap narrows considerably: 52% chose the unbranded PPO, and 48% chose the unbranded HDHP.
“It’s clear that employees’ decisions can be driven by underlying, non-financial factors like inherent biases against HDHPs, their own inertia around decision-making and an aversion to high deductibles,” added Black. “As employees make several quick decisions during annual enrollment, further education and guidance around the benefits and solutions offered through the workplace is critical. Helping employees overcome these obstacles can enable them to make the best decisions and choices for them and their family—and potentially help create improved financial outcomes for employees and employers alike.”
Voya’s research also uncovered only 3% of working Americans understand the full benefits of an HSA, which is only slightly higher among HSA owners at 4%. This data underscores the notion that employees may be lacking an ability to build strategies to increase health care savings, cover medical and living expenses in retirement, or to use their account as an investment vehicle once the account balance reaches a certain threshold.
Specifically, less than half of respondents were aware HSAs can be used to:
• Pay for health care expenses in retirement (47%);
• Provide tax advantages (47%);
• Roll money over from year to year (43%); and
• Be used as an investment vehicle (29%).
Read the full Voya Financial survey here.
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