After the last two years of shakeups in the benefits space (and, let’s face it, the world in general), this upcoming renewal season may be unpredictable. We’ve sourced the top 10 data points to help business leaders expect the unexpected as they evaluate their employer benefits.
Between another COVID-19 variant hitting the scene, skyrocketing healthcare costs, all-too-common employee burnout, and ongoing economic uncertainties … we know that the HR and business leaders reading this would rather run for the hills than even think about benefits renewals.
But here’s the thing: benefits don’t exist in a vacuum. They’ve been heavily impacted by all the ahem difficulties mentioned above. So this renewal season, things may get weird.
Don’t panic. The earlier you’re aware of what’s coming your way, the more time you have to prepare. So let’s start now. Read on for the 10 data points you should know before you kickstart your benefits renewal and head towards open enrollment.
1. In 2021, small to midsize employers (50-499 employees) saw an average healthcare renewal increase of 9.6%.
Meanwhile, large employers (500+ employees) saw an average 5% increase.
Yet it wasn’t too long ago that it was the exact opposite — SMBs had the lowest renewal rates and large employers had the highest. In 2017, SMB healthcare costs rose by only 2.3% on average, compared to 8.8% among employers with 5000+ employees.
2. C-suite leaders believe that 53% of healthcare spending is wasted because employees are confused about their benefits.
It’s a snowball effect. Employees don’t understand their benefits. So they don’t choose the right plans. And then they’re more likely to make costly missteps when seeking care. And then they end up paying more than they need — and so does their employer.
3. 96% of Americans overestimate their understanding of health insurance concepts.
The assignment was simple: correctly define four key health insurance terms. Pretty common terms, nothing they wouldn’t hear in a run-of-the-mill open enrollment presentation — deductible, coinsurance, co-pay, and out-of-pocket maximum.
But of those surveyed, only 4% were able to correctly define all four terms. Yes, you read that correctly: just 4%.
Why does this matter? It’s simple: If employees don’t understand their insurance, then they won’t use it correctly — or perhaps not at all. And that has wide-reaching impacts, from their long-term health, to their engagement at work, to your business’ bottom line.
4. Only 40% of Americans say they’re “very confident” in their ability to choose the right health insurance plan.
Considering that last data point, this shouldn’t come as a surprise. Most employees end up choosing the wrong healthcare plans — and more often than not, they overestimate how much coverage they’ll need. According to a study by Carnegie Mellon, most employees who chose a low deductible plan would have gotten the same or better results with a $1,000 deductible while saving up to 42% on their annual premiums.
5. Half of American adults have delayed medical care because of the cost.
Adding that to the 1 in 5 who put off medical care in the first year of the pandemic, there’s clearly a huge backlog — which could put further demand on our already-strained healthcare system.
Plus, delayed medical care often leads to more intensive needs and higher medical bills; without regular preventative care, what was once a minor ache could have grown into a more serious (and pricier) issue.
6. Three in ten Americans report not taking their medications as prescribed due to costs.
And since retail prescription drug spending is expected to increase by 5% each year through 2030, more patients may find themselves unable to swing those costs.
7. More than four in ten adults with health insurance currently have debt due to medical or dental bills.
Even with insurance, healthcare is pretty dang expensive — and it’s only getting worse. In 2021, total out-of-pocket spending jumped by 10% to reach $491.6 billion, shaking out to about $1,650 per person. If costs continue climbing as expected, that number will balloon to $800 billion by 2026.
Plus, no matter how informed you are, it’s far too easy to make a wrong move and end up with huge bills. Over half (57%) of Americans have received a surprise bill, and 20% of them got those bills because they received care from out-of-network doctor.
8. Healthcare inflation has remained between 2-3% since the start of the pandemic — but that’s expected to change.
Healthcare is not exempt from the economic variables that are impacting inflation across markets — strained supply chains, labor shortages, simple supply and demand. And since healthcare inflation tends to drive up healthcare costs generally, we may be in for some compounding price hikes.
9. About 27% of Americans have reported feeling symptoms of anxiety or depression within the last two weeks.
Compared with the pre-pandemic baseline of 10.8% in 2019, it’s clear that the pandemic has had a massive impact on people’s mental health. But we clearly didn’t need to tell you that — nearly 40% of employers have expanded their mental health offerings since January 2020.
Still, only 67% of workers say that they find their employers’ mental health benefits to be beneficial.
10. One in four employees report having had COVID-19 — and 37% of them still experience long-term effects.
Despite being over two years into the pandemic, there’s still a lot we don’t know about the long haul impacts of Covid. But we do know that they’re much more likely to take twice the number of sick days as those who did not have Covid, and are more likely to experience greater levels of anxiety or depression. This could very well lead to a greater need for care and higher utilization over time.
Yikes. So what can we do?
Let’s face it: the U.S. healthcare system is changing (and becoming more unsustainable) by the day. The services and support that worked in the past may no longer suffice in a system marked by ubiquitous medical debt, spiraling healthcare costs draining small businesses’ funds, and a widespread lack of healthcare literacy.
But the benefits marketplace is moving faster. Over the last three years alone, a range of innovative tools and services have emerged to support employees in choosing and using their healthcare plans (while keeping costs sustainable for employers).
So the tools are there. It’s up to employers to use them. And if there’s ever been a time to make a change, it’s right now.
Here’s how to get started:
Take a hard look at your current offering. Does it still measure up, even in these changing times? Are they aligned with your employer’s financial plans? And perhaps most importantly, what do your employees think? (And if you want an expert perspective, we’re happy to offer a free benefits audit. Just reach out here.)
Talk to your broker. They should be your primary ally in future-proofing your benefits offering during renewals, and also providing support to help keep your employees healthy and secure year-round. Here’s a list of questions to get the conversation going.
Equip your employees with tools and knowledge to confidently choose and use their benefits. By offering services like healthcare navigation or price comparison tools, or incorporating money-saving tips into employee communications, you can help your employees become better-informed buyers of healthcare.
Explore the benefits marketplace. There are hundreds (if not thousands) of vendors out there who could level up your employees’ coverage. Check out the Nava Benefits Search Engine to see vendors from 28 benefits categories, read reviews from real HR leaders, and get a quote for free.
About the Author
Nava’s National Practice Leader with over 20 years of industry experience, Bryan formerly held Consulting and Leadership positions with Aon, Mercer, and Optum. Prior to joining Nava, Bryan was the Market Leader for Lockton in Northern California and Oregon. Bryan has experience and expertise in creating value for clients through creative strategies and innovative design. His role at Nava is to provide thought leadership to our clients and drive innovation to ensure an exceptional client experience.