Offering an affordable healthcare plan is more complex than it once was, as diverse workforces have different needs. Employers should listen to their employees to determine the healthcare plan design strategy that makes healthcare affordable for all workforce segments. - BY MALIBU KOTHARI

An employee healthcare plan must be affordable before it will be effective. Unfortunately, many firms find that despite offering healthcare to employees, there’s a low rate of uptake and utilization. Some employees may be unable to afford their share of the plan premium, deductibles, or copays, leaving them longing for health support but turning down the plan. Others pay for benefits they never use, so they believe they are overpaying and resent the plan.

The solution may lie in a different healthcare plan design. One-size-fits-all healthcare plans are increasingly unaffordable for many employees as premiums increase. New models, like income-based cost sharing, segmented plans, and virtual care can offer organizations the chance to support a healthy workforce with a more affordable health plan.

Costs Down and Accessibility Up

The global insurance company WTW analyzed healthcare trends and found the top issue was healthcare affordability. Inflation has driven healthcare prices up 73%, and low wage workers and workers with chronic conditions feel that increase most intensely. For a healthcare plan to work, it therefore needs to address both the needs of the workforce and the associated costs of care.

The WTW survey identified various approaches to increasing affordability for all workforce segments and managing employer costs by improving quality and outcomes. They included adding or enhancing low-or no-cost coverage for certain benefits, changing the plan design, and adding or enhancing vendor solutions and voluntary benefits in case of a catastrophic event. Offering virtual medical and behavioral care was expected to be an essential strategy for lowering costs while increasing accessibility, for example by offering virtual care with reduced deductibles and copays.

Another approach is to assess design changes, like salary banded contributions. Income-based premiums can make healthcare plans more affordable for lower-paid workers. A fixed pay percentage of income is more equitable than making all employees pay the same amount, and can reduce preventable absences and other health-related costs to the employer.

Segmenting the Workforce to Improve benefits Offerings

Along with lowering costs by leaning on virtual care, structuring benefits to meet the needs of different employee groups coupled with income-tiered premiums can increase plan use without significant cost increases. As an example, consider JPMorgan Chase and their comprehensive healthcare plan. One of the features is that the annual deductible and coinsurance maximum are based on whether the employee has a total cash compensation under or over $60,000. Employees making less than $60,000 have lower costs.

Employers can segment the workforce in different ways beyond compensation levels to identify the optimal tiered healthcare program design. For example, United Healthcare data research has found the four generations of workers in the workforce have different needs. Baby boomers care about their relationship with a primary care physician, pharmacy tools for managing prescription costs, wellness and heart disease management programs, and quality care and costs. Generation X values access to scheduling and online tools, in-person and virtual health options, wellness and chronic condition prevention options, and quality of care and convenience. Millennials want behavioral health support and resources, maternity care programs that cover more than pregnancy and birth, access to a network of pediatricians and other family support resources, and convenient, digital, and on-the-go care. Generation Z wants mobile apps or digital tools that make health care easy to navigate, virtual care options, access to behavioral health support and resources, and lower cost of care options. Employers need to look at the specific makeup of their workforce and design a health plan and benefits to best meet their needs.

It is not just income and age that impact healthcare needs. A diverse workforce has diverse health issues. One of the advantages of a benefits package enabling a wide selection of services coupled with varying premiums based on the selections is that they can better control personal costs. A base plan with voluntary add-ons can improve affordability by enabling employees to manage out-of-pocket costs while selecting the most applicable options.

It should be noted that employees who are covered by an employer-paid premium but cannot pay the amount for family coverage may qualify for inexpensive family health benefits through the Affordable Care Act’s Marketplace. The Marketplace has a test in that an employer plan that costs more than 8.9% of household income in 2024 would make an employee eligible to apply for health insurance for family members through the Marketplace.

Engaging Employees

A study by the National Pharmaceutical Council found employees engaged in the design of health benefit plans leads to benefits packages that better reflect employee needs and preferences. Plus, since employees better understand what goes into the benefits package decision, they are more willing to pay more for additional coverage in a benefit category. A high level of buy-in and input into benefits design also increases employee satisfaction.

Engaging employees in the process can also help uncover if employees are delaying care in certain areas because of affordability. Avoiding preventive medicine or not caring for health needs due to affordability directly impacts the amount of sick leave taken, employee retention, productivity, and employee engagement. By gaining awareness of where and how this is happening, firms can modify designs to cater to their specific population of workers and their needs.

It is not always a fast process, or a “one and done” engagement activity. To continue to offer quality healthcare benefit plans and plans that are affordable, employers will need to continually survey and revisit plan designs and costs. However, companies that make the effort can expect to see better benefits program designs that benefit both the employees and employers long-term.