Recommendation Tools Strongly Influence Employees’ Health Benefit Decisions, According to New Study

NEW YORK, March 14, 2018 -- Today, the Private Exchange Research Council (PERC), a think tank composed of private benefits exchange experts and top national insurance brokers and consultants, released new data showing that decision support and recommendation tools have a significant impact on employees’ decisions to purchase health insurance and other benefits on benefits marketplaces.

The report, “Understanding the influence of decision support on employee benefit selections,” analyzed how employees used system recommendations in benefits marketplaces to choose the products and plans that best match their needs. The report was based on findings from 1,356 companies between 2013 and 2017.

The research showed that employees are more likely to purchase products if they were recommended to them than those who bypassed the recommendation engine and shopped on their own. For example, 86% of employees who receive a recommendation to purchase vision insurance do so, compared to 49% of those who do not receive a recommendation and shopped on their own. In addition, the recommendation engine helps to educate employees on the value of different types of benefits, such as long-term disability, life insurance, and identity theft protection. Exposure to new products, coupled with education on existing products, helps employees see the value of including these benefits into their portfolio of coverage in order to optimize their overall financial protection.

“One of the distinct advantages of benefits marketplaces is that they better meet the needs of today’s diverse workforce because they give employees the freedom to choose what fits their particular needs from a wide range of medical and other insurance products,” said Alan Silver, director of carrier relationships for Liazon. “With the help of decision support tools, we are seeing employees make smart and thoughtful decisions about how to spend their benefits dollars.”

Key findings include:

• In 2017, 46% of employees bought the medical plan that was recommended to them, up from 33% in 2013. Of those that didn’t buy the recommended plan, 32% of employees bought a plan with a higher premium than the one recommended to them, while 22% bought a plan with a lower premium. This supports the idea that employees choose the plan that’s best for them when given meaningful choices and information, as opposed to simply selecting the lowest- or highest- premium plan.
• 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.
• In 2017, employees who purchased medical coverage spent a total of $10,536 on their overall portfolio of benefits. Employers subsidized approximately 70% of this cost, with an average employer contribution of $7,385 – meaning employees spent about $3,200 of their own money to purchase the benefits they valued.
• Overall, the average portfolio cost was 11% below what was recommended, as the system recommended an average of eight products per employee whereas employees typically only purchased five in 2017. This demonstrates that employees considered the products that were recommended to them and made tradeoffs between the added value of the products and the associated costs.

The research also illustrates the influence of the recommendation engine in getting employees to consider different plan options, such as high-deductible health plans that can be paired with HSAs and typically have lower premiums. HSA-qualified health plans were recommended to 50% of employees who went through the recommendation process; of those employees, 68% purchased them. In comparison, 40% of employees who did not receive a recommendation enrolled in HSA-qualified plans when given a choice of plan types. In addition, those who enroll in this type of plan are choosing to stay enrolled: 81% of employees who enrolled in HSA-qualified plans in 2015 also enrolled in HSA-qualified plans in 2016 and 2017, suggesting that these types of plans are meeting their needs.

Finally, these employees are also choosing to open Health Savings Accounts and fund these accounts with their own money: In our 2015 report, we found that 63% of employees that enrolled in an HSA-qualified plan also enrolled in an HSA, and 86% of those employees put their own money into the account (whereas the remaining 14% only funded the account with money received from their employer).

“The research confirms that guidance and decision support are critical to helping employees take full advantage of the choices in a benefits marketplace as they determine how to spend their money,” said Silver. “Understanding employee purchasing behavior in response to recommendations will help us continue to shape benefits marketplaces that facilitate smart benefits choices.”

About the Private Exchange Research Council (PERC):
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 benefits marketplaces. PERC is composed of benefits 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 benefits 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 benefits 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.

Lana Gersten
Contact:
312-846-1655
[email protected]