Group health insurance plans, set up so the employer picks a health plan and the employees are left out of the decision-making process, have been the tradition since the creation of employer-sponsored health insurance back in the early days of World War II.
However, today’s workforce has changed a lot since then, and so has how we buy health benefits. Now more than ever employees need and want to be involved in their own healthcare decisions for a more personalized health plan.
In this article, we’ll cover the top five reasons why more and more employers are putting their employees back in the driver’s seat of their own healthcare experience, and how employees are benefiting from their renewed empowerment.
1. The way employees consume health insurance is (and should be) personal
Gone are the days where a one-size-fits all group health insurance plan works for every employee. Today’s organizations are filled with a diverse range of employees across age and health needs. What works for one employee simply won’t for others.
For example, younger employees who have little health concerns will likely never meet the high deductibles that come with many group health insurance plans. Older employees may qualify for Medicare, so they have no need to participate in their employer’s group plan.
Then there are other employees who don’t need employer-sponsored coverage at all because they’re already covered under a parent’s or spouse’s plan. Plus, we can’t forget the employees who may not see a need for any health coverage and choose to pay for their occasional doctor’s visit out of pocket.
With such a wide range of health profiles, it’s no wonder employers are choosing to cancel their group health insurance plans and instead adopt reimbursement models like health reimbursement arrangements (HRAs).
With an HRA, employees go on the individual market and choose a plan with the right coverage for them. Employers then reimburse any verified healthcare expenses on a monthly basis, tax-free, up to the employer-chosen monthly allowance amount.
2. Employees move jobs more than ever before
When you think about it, having something as important and personal as your healthcare tied to something as ever-changing as your place of employment is rather strange. Especially for Millennials who hop from job to job much more often than their older counterparts.
A study by Visier shows that Millennials resign nearly twice as often as non-Millennials with comparable tenure. This happens for a lot of reasons, including Millennials' likelihood to seek out better pay, higher positions, or a more appropriate culture fit.
Given that the younger generation is more likely to transition between several organizations before settling in, these employees are far more likely to see the appeal in individual health insurance that can continue with them from job to job. No more worrying if their doctor will be in their employer’s insurance network or if they’ll have an increased premium or deductible.
3. Today’s employees work remotely
With more and more companies going all-in on remote work, one organization can have employees from all across the country. As organizations hire in different states, they may find an entirely different network of healthcare providers.
Handing out one group health insurance plan to every employee, no matter where they’ll be looking for a healthcare provider, puts even more limits on where employees can go and which doctors will accept their insurance.
With an individual coverage HRA (ICHRA), employees who know their local healthcare provider network better get to choose their own plan and employers can tailor their allowance amounts to the specific insurance market conditions for each employee.
4. Companies can show that they care
Employees can tell when you’re treating health benefits like just a box to check. By shifting the focus of health benefits from an HR requirement to a strategy for employee satisfaction, owners can show their employees that their health and wellbeing matter to them.
Employee satisfaction and quality health benefits are directly linked. A study by The Science of Care found that workers who reported feeling cared for by their employer were far more likely to stay with their organization for three or more years compared to those who didn’t feel cared for.
What better way to show your employees you care than by offering a health benefits plan that allows everyone to choose the health plan that works best for them?
5. New health benefits allow for employee empowerment
Perhaps the biggest reason so many employers are shifting the decision-making power of health benefits to their employees is simply because there have been new health benefits put in place that allow them to do so.
HRAs have become a formal, IRS-approved benefit in recent years, with arrangements for every organization size and budget available.
PeopleKeep offers three types of HRAs:
- Qualified small employer HRA (QSEHRA)
- A small business HRA designed for organizations with fewer than 50 full-time employees
- Individual coverage HRA (ICHRA)
- An HRA for organizations of all sizes that can work as a stand-alone benefit or as an option for employees who don’t qualify for the group health plan
- Group coverage HRA (GCHRA)
- A supplemental HRA to go alongside a group health plan to help cover the costs that aren’t fully paid for by the group plan, and helps offset the costs of premiums and deductibles
As employees start making their own healthcare decisions, they’ll understand their plan and coverage better, use their benefits more efficiently, and overall lead a healthier and happier life. By making this shift, whether it’s through canceling your group health insurance plan and adopting an HRA or supplementing your group health insurance plan to help cover out-of-pocket costs, your employees and their families will thank you for it.
This article was originally published on October 14, 2013. It was last updated August 30, 2021.