System recommendations help guide purchasing decisions in a benefits marketplace.
Employers are looking to improve the employee benefits experience by expanding choice in both plan and product offerings. According to our Best Practices in Health Care Employer Survey Report, 84% of companies already offer choice in medical plans, and 86% would like to increase choice and variety in their voluntary offerings by next year.
Offering more choice in benefits is a good thing; it shows employers are interested in ensuring their benefits meet the needs of their diverse workforce.
One way to offer employees more choice is through a benefits marketplace, aka private exchange, which allows employees to select their own benefits from an array of choices provided by their employer in an online marketplace. But it’s a model some have been reluctant to adopt due to concerns that giving employees a wide range of coverage options to choose from could lead to an overwhelming experience – or worse – poor benefits decisions.
So what can employers do to make the benefits selection process manageable and ensure employees are making informed choices?
Evaluating decision support in a benefits marketplace
It’s essential for employers to choose a benefits platform that provides resources, known as decision support, to help employees navigate the benefits selection process and make the most informed choices. Decision support can come in many forms and the tools offered will vary depending on the vendor. However, when evaluating a benefits marketplace, employers should consider the level of support provided, including educational resources and plan comparison tools, to help employees understand the benefits available and which plans will work best for them.
Recommendations are key
Some benefits marketplaces offer even more support by providing employees with the option of using a recommendation engine to help them make smart choices. In the case of Willis Towers Watson’s Group Marketplace, an online questionnaire is used to assess employee information regarding health care use and preferences, financial and lifestyle concerns, among other factors. The engine then uses this information to generate specific recommendations that match those needs and preferences to a collection of products and plans that best meet the needs of each employee. In addition to recommendations, the engine is used to educate employees on the value of different types of benefits, such as long-term disability, life insurance and identity theft protection.
So, how helpful are these recommendations—and more importantly—are employees embracing them?
Gauging the impact of system recommendations
New research from the Private Exchange Research Council (PERC) – a think tank composed of benefits marketplace experts and top national insurance brokers and consultants, including Willis Towers Watson – provides an in-depth examination of the decisions employees are making and the impact of system-generated recommendations in shaping and influencing these behaviors. This study is based on learnings from hundreds of thousands of employees who have purchased benefits through benefits marketplaces.
PERC’s research found:
- Employees don’t necessarily gravitate toward the lowest- or highest-cost plan when given meaningful choice. Forty-six percent of employees bought the medical plan that was recommended to them. Of those who didn’t buy the recommended plan, 32% bought a more expensive plan, while 22% bought a less expensive plan.
- Decision support provides education on why Health Savings Account (HSA)-qualified plans are a good choice for certain employees. About two-thirds of employees who were recommended to buy HSA-qualified plans did so, compared with 40% who purchased an HSA-qualified plan when they didn’t receive a recommendation.
- Certain employee groups were more responsive to recommendations to buy particular products. For example, Generations X and Y were more likely to follow recommendations concerning the purchase of life insurance, and those who purchased HSA-qualified plans were most able to consider and respond to recommendations involving solutions outside of their health plan that met their individual needs and preferences.
- When given choice in benefits, employees are making careful decisions based on their own budgetary concerns as to how they want to spend their money. While employees are spending above their employers’ subsidy by an average of $3,200, they are making conscious decisions to spend less than the recommended portfolio cost, on average, by 11%.
What can we conclude from this research?
While the recommendation provides guidance, employees are still ultimately making their own decisions about buying what they feel fits their own personal needs. Most are using system-generated recommendations as an anchor point to decide whether they need more or less protection. This supports our belief that employees can and will make the best benefits decisions for their needs when presented with increased choice. All it takes is the right guidance.
For more information about this study, see PERC’s latest white paper, “Understanding the Influence of Decision Support on Employee Benefit Selections.”
The Private Exchange Research Council (PERC) was established in 2015 to access and analyze data from hundreds of thousands of employees who have purchased benefits through Liazon benefit marketplaces. PERC is comprised of benefit marketplace experts and top national brokers and consultants. As marketplaces have increasingly been shown to strengthen employee engagement, empowerment, and education, PERC has provided the market with insights into how people are making decisions when shopping for their benefits.
PERC explores frequently asked questions with respect to benefit marketplaces, such as how demographic and behavioral factors influence buying decisions, the impact of decision support on buying patterns, and how buying patterns change over time, among others. PERC provides this information, which is unprecedented in the industry, because of access to data from Liazon, a leading operator of benefit marketplaces with over a decade’s experience in the industry.
PERC member companies include: Arthur J. Gallagher & Co., Hub International, Lawley Insurance, Liazon/Willis Towers Watson, and Lovitt & Touché, along with health law and policy expert Chris Condeluci of CC Law & Policy.