SHRM: Health Insurance ‘Knowledge Gap’ Is Wide as Open Enrollment Approaches
Employers can educate employees on cost-appropriate health care choices
Many workers in the U.S. misunderstand basic facts about health insurance and remain unsure how to select the most appropriate health plan offered by their employer during annual open enrollment, new research shows. As a result, they—and their employers—may be spending more than they should on health coverage.
Confusion remains high around key terms such as "deductible" and "co-pay," while the workings of health savings accounts (HSAs) and flexible spending accounts (FSAs) are often a mystery.
HSA and FSA Mix-Up
A recent Forbes Advisor survey of 2,000 Americans who have health coverage similarly shows confusion over health insurance terms, with over three-quarters of respondents unable to identify the term "co-insurance" and nearly half incorrectly defining "co-payment" and "deductible."
When asked what they know about HSAs, slightly more than 40 percent correctly answered that an HSA lets you set aside money on a pretax basis to pay for qualified medical expenses or that an HSA can pay deductibles, co-insurance and co-pays.
Many respondents, however, seemed to confuse HSAs with FSAs and incorrectly said you can set up an HSA with any health plan, you lose HSA money if you don't use it in a year and that you lose your HSA if you switch jobs. Those are all facts about FSAs, not HSAs.
"Nearly 30 percent incorrectly believed that not liking a current insurance plan or getting diagnosed with a new medical condition would make someone eligible to change health insurance at any time. That's not the case," wrote Les Masterson and Michelle Megna, insurance analysts at Forbes Advisor, a resource platform to help consumers make financial decisions.
In addition, 20 percent guessed that moving would allow them to change their health plan. "That could be correct, depending on where the person is headed," Masterson and Megna noted. "If you move out of state, you're likely eligible to buy different health insurance. If you're just moving within the same area, you probably won't be able to change health plans."
A new report, Health Care Literacy Takes One Step Forward, Two Steps Back, indicates that employees struggling with choosing and using their health care plans can cost themselves—and their employers—more than necessary.
The report draws from a survey earlier this year by Optavise (formerly DirectPath), a benefits education, enrollment and health care transparency firm, of 1,055 U.S. workers with employer-sponsored health plans.
Sixty-two percent of respondents said they don't always compare costs before receiving care, which could mean they are overpaying for health care services. Only 10 percent of respondents said they check whether a medical provider or facility is in-network whenever their health plan changes.
Other findings include survey respondents wanting to know how to:
"From inflation to a greater number of Americans facing medical debt, it is critical that consumers have the information they need to make cost-conscious health care decisions," said Kim Buckey, vice president of client services at Optavise.
While new regulations have gone into effect to help curb surprise medical bills and to increase price transparency for health services, she noted, "these regulations alone are often not enough to reduce health care spending, especially since hospitals may not be in compliance and consumers generally do not know that these regulations exist."
To ensure employees receive the support they need to increase their health care literacy and improve their financial wellness, more employers are partnering with benefits educators and providing virtual education and online tools, Buckey said. According to the Optavise survey:
"It is encouraging that employees want to increase their health care literacy rates to improve their financial situations," Buckey observed. "More employers, however, need to rise to the occasion." One way to do this, she said, is by providing accurate, timely and consistent information to employees on how to choose and use their health plans, "so that they—and the company—are not overspending on health care services."
Read the article here.
Author Stephen Miller, CEBS