The Impact of Consumerism on Benefits Strategy & Selection
Employee Benefits News recently hosted a webinar featuring Liazon co-founder Alan Cohen and Forbes analyst Stephen Diorio to discuss the impact consumer-directed experiences are having on the benefits environment. Kathy Chambers, HR Director at Foreside Financial Group, shared her first-hand experiences using a private exchange to empower employees to make their own benefits decisions. Here are some highlights from their conversation:
“Benefits Consumerism” Explained
Technology has enabled transparency, simplicity and personalized experiences for shoppers. This move toward consumerism is changing the way insurance carriers, consultants, and brokers customize, market, and deliver their solutions, as people are now making more educated choices as they come to understand their benefits better — known as health care consumerism.
Alan Cohen summed it up as “benefits consumerism is an assist to health care consumerism.”
What Makes a Business Consumer-Centric?
Stephen Diorio offered his insight on best practices from top business marketers who are becoming more consumer-centric:
He identified three key criteria that define a consumer-centric model as:
Personalization – Find creative ways to create value by tailoring solutions and delivering them better.
Simplicity – Make it easy to choose.
Choice – Make it easy to build a portfolio of solutions from numerous options.
He also advised on 5 key things businesses need to keep in mind as they move to a consumer-centric model for benefits:
- Engage stakeholders across multiple disciplines (in addition to HR) within and outside of the organization.
- Use data to leverage information you know about employees to target their needs.
- Consider packaging – how you present your options can be more important than the options themselves.
- Use educational content and decision support to help people make rational decisions.
- Make it measurable to gauge customer engagement, value, and satisfaction.
In sum, he said, employees are coming to expect more from their experiences with other brands. Now, data and technology can make the consumer-centric experience possible for benefits, too.
How Private Exchanges Bring Consumerism to Benefits
Alan Cohen led the conversation on private exchanges as a tool for benefits consumerism:
Navigating choice is not new. People manage choice in other aspects of life – like buying a car – they can comparison shop and they don’t need to be experts. Why not with benefits too?
Benefits experiences should be based on who people are and what their needs are. By letting them shop, make choices, consider pricing and other dimensions like risk tolerance, networks, and services provided, they can ultimately make smart decisions for themselves and their families.
Alan outlined 3 steps for incorporating benefits consumerism using an exchange model:
- Give employees money with which to shop. (Companies can move to a defined contribution model in which they allocate money to their employees to use in a benefits marketplace.)
- Offer a broad array of health and ancillary products in a supermarket environment that provides plenty of curated choices.
- Use a system (known as decision support or recommendation engine) to help employees assess their choices and get a formal recommendation, and offer a service model to help them through phone support as well.
Liazon has seen that employee-driven, or “consumer-centric benefits,” like those offered through a private exchange, result in greater satisfaction levels than traditional benefits models. Empowering employees to make their own benefits decisions results in greater awareness and understanding of their health benefits.
It’s not enough to educate employees on their options for health care and understanding their plans; it’s also necessary to teach them about the broader scope of benefits decisions that can help them achieve greater results. When presented in this context, employees like choice – and they make smart decisions too.
Businesses that adopt direct-to-consumer benefits models are realizing unprecedented increases in the level of consumer engagement, trust, satisfaction, and perceptions of value. This was demonstrated with a real-world case study for benefits from Foreside’s Kathy Chambers.
Foreside was looking to streamline their benefits administration but wanted something more robust including decision support, advanced capabilities for expanding offerings, and platform integration. Using an exchange model, they went from 4 medical plans and a few ancillaries to 8 medical plans with an extensive selection of optional coverages including ID Theft Protection, Pet insurance, Legal plans, and more. It was important to Kathy and her team that the company not dictate their employees’ choices.
The result: People chose the benefits that were best for them, not necessarily what was cheapest. And the company realized cost savings, too.
Kathy echoed Alan’s sentiments about employee engagement with findings from her own company’s experience which indicated that, as a result of moving to a private exchange:
-100% of their employees said they preferred to choose their own benefits, rather than have their company choose for them.
-100% of their employees were satisfied with their marketplace experience.
-100% of their employees were more aware of the company’s contribution and valued this contribution more.
-90% of their employees valued their benefits more.
-71% of their employees said they were more likely to remain with the company as a result of its benefits offering.
In Kathy’s experience, by allowing employees to shop, they actually became better consumers. And when employees are happy with their benefits, the employer benefits too.
Speaking personally of her role, she said, “At a time when employee benefits are often just an assumed addendum to the compensation package, it’s really quite rewarding when employees come to see them as a true benefit.”
Click here to access a recording of the full webinar for a limited time.