Deductibles: A wet blanket for recruitment and retention
Businesses say their biggest problem is finding qualified workers—an issue that transcends industry, geography and company size. It’s a candidate’s market; they have the negotiating power and low tolerance for inferior benefits.
Companies are working hard to offer creative incentives like personal trainers, summer hours and commuter reimbursement to help them compete. But what employees care about most is healthcare. Employees were asked to rank 11 benefits, including a competitive salary and 401(k), in a recent nationwide survey. Healthcare ranked as the most important employee benefit. So, it’s time to get real: How does your health-plan offering stack up?
Some employers are moving away from the high-deductible health plan (HDHP) because employees don’t like them. Four in 10 employees with the highest deductibles report being frustrated, and nearly a quarter say they’re angry. If you offer an HDHP, it’s time to explore other options. Not only are HDHPs disliked by employees, they don’t work.
Deductibles were introduced into employer-sponsored health insurance to give employees more “skin in the game.” The theory was that people would become savvier shoppers if they had to cover 100% of their treatment costs out of the gate. But deductibles have failed to achieve their intended purpose, and prices have continued to rise for employees and employers.
There are three fundamental flaws of deductibles:
- They prevent people from getting the care they need.
- They mask value and don’t provide transparency into cost or treatment options.
- They treat all conditions equally.
Bottom line: On an HDHP, your employees aren’t empowered to get the care they need when they need it.
For years, J&E Manufacturing Co., a custom metal-manufacturing company in the Midwest, struggled with rising deductibles. When its former health-insurance provider told the executive team premiums would increase more than 30% in 2019 and the deductible would balloon to $6,500, management took a critical look at alternatives for their 200 employees.
“There was no way we could stand in front of our employees and tell them that,” said Ha Nguyen, corporate human resources manager at J&E. “It would be terrible for morale, and we would risk employees deciding to explore the marketplace to find a different job. With manufacturing in a talent shortage, we can’t put those numbers in front of our employees.”
Related: Top 5 benefits trends of 2019
J&E knew the only way to attract and retain talent was to shake up its health-plan offering. The company found a solution in a new model of health insurance that gives employees more control. J&E traded in its deductible for a plan that provides simple copays, cost certainty and treatment options—on-demand health insurance. Now, J&E employees know what options are available and how much care will cost before receiving it, so they can make informed, cost-effective decisions that are right for them. In 2018, 80% of members on the on-demand plan spent less than $500 in total copays—that’s one-sixth the cost of the average deductible. Not only are J&E’s current employees excited, but the company now has a compelling edge to attract new talent.
“In the past, I just glossed over the health-insurance plan during interviews. Now, it’s one of the first things I mention about the company,” Nguyen added. “I feel more confident in our health-benefit offering –knowing it is competitive and on the cutting edge.”
Cumberland School District in Wisconsin also switched to on-demand health insurance and experienced a positive and noticeable difference in recruitment efforts. While other school districts in the area struggled to attract teachers, Cumberland’s offers were accepted by their top candidates. The district attributes its positive hiring trend to providing affordable and quality healthcare through full replacement of its former plan with the on-demand plan. Cumberland is also seeing increased employee retention, which officials attribute to the new health benefit.
Your health plan should be the first thing you bring up when you’re selling candidates on why they should join your company. You should feel proud and excited to tell them about the rich benefits they’ll have access to—but a high-deductible health plan is a non-starter. It’s time to try something new!
Jodi Hubler is board member at Bind On-Demand Health Insurance and managing director at Lemhi Ventures.