HR Morning: How healthcare literacy impacts open enrollment, and 3 ways HR can help.

For most employers, open enrollment season is just months – if not weeks – away. While stressful for employees, open enrollment can be equally frustrating for employers, particularly those who have invested in new plans and programs for their workforce.

Surveys have found that consumers are confused about both the enrollment process and their own benefits. Many lack healthcare literacy and fail to ask questions about what they’re getting in their policy before they enroll.

As a result, employees will often just roll over their previous year’s elections instead of reviewing their options rather than choosing the best healthcare plans for their current situation.

The importance of healthcare literacy
To understand why employees still seem to struggle with choosing and using their benefits, Optavise surveyed more than 1,000 U.S. adults with employer-sponsored health plans who do not work in the insurance industry.

Optavise’s 2023 Healthcare Literacy Report found that employees lack confidence in understanding their coverage, due to a lack of healthcare literacy. Healthcare literacy is “the degree to which individuals have the ability to find, understand and use information and services to inform health-related decisions and actions for themselves and others.”

When considering this year’s open enrollment, here’s what HR teams can do to empower employees to make more informed healthcare plan choices and effectively use their plans year-round.

Leverage the channels employees find useful
Despite employer efforts to provide useful benefits information at open enrollment, employees still struggle to find the best resources to learn about their healthcare. They often rely on less than ideal resources for information.

Optavise found that 35% of employees taught themselves about benefits terms and processes by going online or reading other materials. And nearly half (46%) reached out to friends, family and coworkers, who are unlikely to be benefits experts.

Fewer employees are also getting information from employers’ HR teams. Only 27% of employees said they received their information from their employer’s HR team – down from 30% in 2022 and the lowest percentage reported in the past four years – and only 15% learned from outside benefits experts.

Although employers typically rely on a combination of online tools and print materials at open enrollment, employees do not find these channels particularly useful. Only 68% of employees reported online resources to be very or extremely helpful, and only 49% reported email to be very or extremely helpful – a significant decrease from 59% in 2022.

Group or one-on-one sessions with HR or benefits experts were generally well-received by employees. Over 80% rated one-on-one sessions as very or extremely helpful, even though employers offered fewer opportunities compared to last year.

Further, employees who participated in such meetings were far more likely to supplement their employer-sponsored coverage with voluntary or buy-up coverage – 46%, compared to 33% of those who did not speak with an expert.

By leveraging benefits experts, such as the company’s HR team, their brokers or benefit educators, employers can ensure their employees get timely, accurate information about the plans and programs. This can potentially drive engagement and enrollment.

Pay attention to demographics
As with any communication plan, it’s critical to understand the needs and challenges of your audience. This is especially true when it comes to benefits: Employees of different life stages and backgrounds will have different questions and concerns. Therefore, messaging and channels should be tailored to each group.

For example, Optavise found that 80% of Baby Boomers and 76% of Gen X reported that they understand healthcare terms and how they relate to their coverage. This isn’t surprising, given their longer tenure in the workforce and related experience in choosing and using benefits.

Meanwhile, just 68% of Millennials and 60% of Gen Z knew the same information, suggesting that communications to these younger cohorts should emphasize terms and concepts and what they mean for the employees’ out-of-pocket costs.

Employees in the education, manufacturing and retail industries have the largest benefits education gap, according to the Optavise survey. Given the challenges of pulling these workers off the job for group or one-on-one meetings, employers should consider offering scheduled appointments with benefit educators. These educators can review available plans and options with the employee, aiding in the decision-making process.

Additionally, providing online tools that employees can access conveniently could help address the issue, especially since few of them can view benefits information on their work computers.

Make sure employees know what to do after enrollment
Despite the recent push for greater healthcare price transparency and broader public access to such costs, Optavise found that many employees are passing up opportunities to save on their healthcare.

For example, while 88% know whether their plan has a network, only about one-third of respondents check a provider’s status whenever they need care, and 43% check when they are going to see a new provider. Only 35% always or often check prices before receiving medical care, down from 38% last year, and 38% report they rarely or never check costs.

While 45% of respondents reported always or often comparing prescription drug costs before filling their prescription, 36% of consumers who hadn’t compared costs indicated that they were aware they could check drug costs.

However, employees want to learn more about how to use their plans effectively. Optavise found that 41% of employees want to learn how to avoid surprise medical bills; 33% want to learn about their deductible, copay/coinsurance, and out-of-pocket maximum work and what it means for their wallet; and 30% want to learn how to review an Explanation of Benefits and medical bill for errors.

Employees are taking action after the fact to prevent overcharges in healthcare by scrutinizing medical bills. However, more efforts are needed on the front end to manage out-of-pocket expenses.

When employees are dissatisfied with their healthcare plans, they are less likely to compare prices and shop for care than employees who are. But for employees confident in their abilities to make healthcare decisions, their satisfaction with their benefits plan also increases.

According to the survey, 90% of employees who feel extremely confident that they understand their plan are also extremely or very satisfied with that plan, compared to about 14% of those who are slightly or not at all confident. Empowering employees to make smarter healthcare decisions will help them save money, increase satisfaction with their benefits and, by extension, their employers.

For a truly effective open enrollment season, employers must invest in genuinely educating their employees rather than just sharing information about their benefits. Once employees understand how to make effective coverage choices and how to maximize their benefits while managing costs, employers can feel more confident that their workforce is prepared for what lies ahead.

Kim A. Buckey is vice president of client services at Optavise, where she serves as the company's key advisor and senior subject matter expert on new and evolving compliance issues that affect employers. Before joining Optavise, Buckey was a consultant and communication practice compliance champion for Watson Wyatt Worldwide (now Willis TowersWatson). She also served as a consultant with PricewaterhouseCoopers, Kwasha Lipton and Coopers & Lybrand.