When an employer invests the time and money in implementing a new benefits plan for employees, it wants the plan to be a success, attract employee participation and increase employee loyalty, and come in at the budgeted amount. Achieving these ends is easier with some plans than others, and consumer-directed health plans, in particular, can have a rough entry into a company’s benefits package. This might be because consumer-directed health plans are not as readily understood by employees as other types of health plans, or it might be because employees — rightly or not — suspect the plan is a cost-cutting measure for the employer rather than a benefits option that might meet their needs.
Employers can take steps when designing, implementing, and communicating a consumer-directed health plan to increase the likelihood that employees will embrace the plan enthusiastically — or at least give it serious consideration if choosing from a menu of plan options.
A study from Aetna shows how a thoughtful and strategic consumer-directed health plan implementation can have positive results. Aetna interviewed employers that had achieved significant success with their consumer-directed health plans — annualized cost trend rates 50% below average, and combined employer/employee savings of $15 million per 10,000 employees over a four-year period. These employers had four things in common concerning their consumer-directed health plan strategy:
- Fostered a culture of health care consumerism among all employees, beginning with senior executives.
- Implemented a focused employee communication and education campaign.
- Offered wellness programs and incentives for healthy behaviors, as well as 100% coverage for preventive care.
- Carefully constructed a benefits package that included appropriate levels of employee responsibility.
An issue brief from the Center for Studying Health System Change, in analyzing factors critical to consumer-directed health plan adoption, notes that these plans are complex, requiring employee understanding of the federal tax rules for the savings account component of the plan, including contribution caps and what medical expenses can be paid with health savings account funds. Consequently, consumer-directed health plans require extensive employee education. In fact, a study from Towers Perrin concluded that even a well-designed consumer-directed health plan is not likely to be effective unless it is combined with a thorough and continuous education strategy. The study found that people often misunderstand the risk associated with the savings account component of a consumer-directed health plan, because they confuse it with other forms of health care coverage. For example, they think the use-it-or-lose-it rule associated with flexible spending accounts applies, and don’t understand that their health savings account funds will roll over from year to year.
In looking back over the factors identified in the surveys cited above, the following — at a minimum — should be considered critical to consumer-directed health plan success:
- Position the consumer-directed health plan as part of an overall health and wellness strategy. Cover preventive care generously, and provide incentives for employees to get and stay healthy.
- Educate employees on the ways in which a consumer-directed health plan is similar to a traditional plan, and the ways in which it is different. Employees need to understand that although their health plan deductible will be higher, their financial risk is limited, and is offset to a degree by lower premium costs.
- Show the company’s commitment to the consumer-directed health plan by engaging top management in plan buy-in and by making some type of company contribution to the account portion of the plan.
- Communicate the plan on an ongoing basis. Publicize good experiences, and share cost-savings data.
Consumer-directed health plans can be a win-win for employers and employees, but for that to happen employees need to embrace the plan, and the consumer-oriented mindset that goes along with it.