Research has demonstrated the fact that employees frequently do not choose a plan with the best financial outcomes given their unique circumstances. More importantly, we’ve observed that employees not only choose plans that will be more expensive for them but also plans that they do not actually prefer! We know this to be true because we see employee health plan election behavior change when they are presented with easier to understand information about their benefit choices.
Because employees frequently do not choose plans that they prefer or that save them money, both employers and employees spend much more than they need on health insurance and employees are less satisfied with their benefits than they otherwise could be. The size of this financial loss (which accrues to both the employees and the employer) varies widely based on the plan options and decision support tools available to employees but in most cases is quite substantial.
There are three primary components of cost savings when plan elections are made optimally....
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