Open enrollment is a huge time for companies to consider costs, employees to consider their needs, and HR to feel the pain of it all. Healthcare benefits are one of the biggest costs to employees. Employees try to consider all options across plans. They try to think about what they and their family might need throughout the year, even attempting to consider unknowns and emergencies. However, when it’s finally time to select a plan, the one with the lowest monthly premium tends to be the winner.

However, cheapest doesn’t mean it’s the best option.

It makes sense from an employee perspective. Lower premiums will mean more take-home pay — an immediate and visual win.

Meanwhile, HR (and company leaders in general) are left wondering if they have done everything to help their employees make educated decisions.

Premiums aren’t the total cost.  

When someone prioritizes just the immediate cost or the ongoing payment, they are overlooking a few important details:

• Deductibles (in network and out of network)
• Out-of-pocket maximums
• Usage for the whole year, accounting for unknowns
• HSA vs. flex spending plans

The “cheapest” plan upfront can become the most expensive depending on what they use it for.

HR leaders know this and want to bring more information to the table for their employees. In materials and webinars, they try to cover any confusion over coverage; types of unexpected costs; and satisfaction levels with benefits in the previous year.

The decision to offer plans is a big one. And today there is more legal scrutiny over how plan sponsors come to their decisions. (Check out our previous post on court cases trending this year.)

HR is in a tough spot. They can’t just manage benefits; they have to help employers make smart decisions and back up that work.

That’s a big ask. Plans are complex, and very few people are experts. Plus, employees are having to make decisions under a time constraint.

So they naturally default to what feels safest, which is the lowest monthly cost.

HR teams need to move from plan comparison to scenario mapping:

• What does this plan cost if I rarely go to the doctor?
• What if I have an emergency?
• What will I realistically spend in a year?

A fiduciary approach can help

Fiduciary guidance has become critical. And we aren’t just saying that because we are fiduciaries.

Reducing employer spend is important, but an honest look at expenses includes aligning benefits with how employees use them and plan to use them. Cost is so much more than monthly premiums.

Read more about how employees see healthcare plans.