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The Power of Choice: Supporting Employees With

Personalized Plans

Shandon FowlerSenior Director, Product Strategy

BenefitfocusCharleston, South Carolina

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Agenda

• Intro to the State of Employee Benefits• The Benefits Balancing Act

– The Choice Imperative– The Cost Imperative

• Making Choice Work• Key Takeaways

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Founded in 2000 | NASDAQ: BNFT | 1,700+ Associates

$230M+ in 2016 Revenue | $1B+ Market Capitalization

700+ Software Engineers | $150M in 3-Year R&D

SOC 2 Certified | PCI Compliant

Our Client Base includes:• 825+ Large Employers• 50+ Insurance Carriers• 27 Private Exchanges

Our Platform Supports:• 25M+ Consumers• 1,500+ Data Exchanges• 100+ Benefit Types

Benefitfocus

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The State of Employee Benefits Research Series

Large market1,000+ employees

Jan 2017

Industry comparisons

Apr 2017

Supplemental deep divesOngoing

www.benefitfocus.com/state-of-employee-benefits

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The State of Employee Benefits Research Details

LARGE GROUPScope: 503 employers Employer Size: 1000+Method: Analysis of OE Data

Insights: • Active choice• Known alternatives• Context (demographics, rates, income)• Complementary plans• YOY choice trends

MID-MARKETScope: 307 employers Employer Size: 51-999Method: Analysis of OE Data

Insights: • Active choice• Known alternatives• Context (rates)• Large market comparison

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The Benefits Balancing Act

Value

CostManagement

Consumerismand Risk

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The Long Tail of Retail

High‐Volume Items(10‐15% of all items; 40‐60% of sales)

The Long Tail(85‐90% of all items; 40‐60% of sales)

VOLU

ME

PRODUCTS

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The Long Tail of Benefits

Health insurance

Traditional voluntary

Lifestyle benefits

COST

DIVERSIFICATION

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What’s in the Long Tail of Benefits?

• Critical illness• Hospital indemnity• Telemedicine• Healthcare concierge• Student loan debt assistance• FinTech• Pet insurance• Identity theft protection

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Traditionalists

Baby Boomers

Generation X

Millennials

Demographics drive strategies

Personalization matters

Efficiency and scale are paramount

The Benefits Balancing Act:The Choice Imperative

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Broader Health OptionsHave Become the Norm

SOURCE:  Benefitfocus State of Employee Benefits – 2017 – Large Group and Mid Market

52% 56%

40%

6%4%

3%

0%

10%

20%

30%

40%

50%

60%

2016 ‐ Large 2017 ‐ Large 2017 ‐ Mid

HDHP Choice HDHP Full Replacement

Percentage of Employers Offering HDHPs, 2016-2017

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Broader Total Benefits Options are also Becoming the Norm

SOURCE:  Benefitfocus State of Employee Benefits – 2017 – Large Market

64%8%

19%

9%

53%

8%

22%

17%

Percentage of Large Employers Offering Income Protection Voluntary Plans, 2016-2017

2016 2017

36% 47%Large employers offering voluntary plans increased by 31%

Large employers offering three or more voluntary plans increased by 88%

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of large employers offer 11 or more benefit types74%

We focus on choice.Employees want options.

Choice vs. Options

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Choice vs. Options

The reasons for buying a voluntary product are similar across all employer-size categories.

The top three items rated as most important include: 1. Products filled personal needs 2. Products help fill gaps in primary medical coverage3. Convenience of buying at work

Source: Eastbridge Consulting Annual, 2016

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Millennial Subscribers to Voluntary Benefits are Increasing

29% 33% 27% 27% 24%

34%

48%47%

49% 51% 57%46%

17% 11% 16% 15% 14% 9%

Accident CriticalIllness

HospitalIndemnity

IDProtection

Legal Pet

Traditionalists

Baby Boomers

Generation X

Millennials > 26

Millennials <26

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The Choice Imperative and Talent Attraction

Recruitment• Broad benefits offerings

can attract talent• Recruits more likely to

review options• Hence, options are

weighted more heavily

Retention• No direct tie to

expanded options and retention, but . . .

• It doesn’t run counter to retention

• Personalization a growing employee expectation

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The Benefits Balancing Act: The Cost Imperative

Health insurance

Traditional voluntary

Lifestyle benefits

COST

DIVERSIFICATION

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Broader Health Options Have Become the Norm

SOURCE:  Benefitfocus State of Employee Benefits – 2017 – Large Group and Mid Market

52% 56%

40%

6%4%

3%

0%

10%

20%

30%

40%

50%

60%

2016 ‐ Large 2017 ‐ Large 2017 ‐ Mid

HDHP Choice HDHP Full Replacement

Percentage of Employers Offering HDHPs, 2016-2017

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Employer Premium Steerage Strategies are Evolving

$2,815

$4,262

$3,156

$4,304

HDHP PPO

2016 2017

• The gap between HDHP and PPO premium reduced by 21%

• PPO Deductibles rose by 9%, averaging less than $200 below the HDHP minimum

• PPO Out of Pocket Max increased by 10%

• Cost sharing implications impact all plan types

1% Increase

12% Increase

Large Group Market: Average Annual Employee Paid Premium—Family Coverage, 2016-2017

SOURCE:  Benefitfocus State of Employee Benefits – 2017 – Large Group

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Employer Premium Steerage Strategies are Evolving

4%

‐14%

8%5%

‐20%

‐15%

‐10%

‐5%

0%

5%

10%

HDHP Traditional

• Steerage in the mid market was strong in 2017

• Similar large market strategies of the past have tempered in 2017 as plan choices became more similar

Change in Middle Market Premium Between 2016-2017

SOURCE:  Benefitfocus State of Employee Benefits – 2017 – Mid Market

Total Premium Change Employee Contribution Change

N = 1,426 Groups

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Economics Strongly Influence Choices

SOURCE:  Benefitfocus State of Employee Benefits – 2017 – Large Group and Mid Market

43%

6%7%8%

36%

2017 Health Plan Participation Mix by Market

HDHP*

Large Market

38%

6%9%

47%

HDHP

Middle Market

* 2016 HDHP Participation = 41% 

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Savings Accounts Are Not Keeping Pace

3.5%

‐1.7%‐3.0%

‐22.3%‐25.0%

‐20.0%

‐15.0%

‐10.0%

‐5.0%

0.0%

5.0%

Employee Contribution Employer Contribution

2017Percent funding of federal maximum contributed:• Large Market = 59%• Middle Market = 55%

Change in HSA Contributions Between 2016-2017Large Market Middle Market

SOURCE:  Benefitfocus State of Employee Benefits – 2017 – Large Group and Mid Market

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Cost Drives Employer Benefit Plan Investment Decisions

Employers shift spending before adding to it.• Evolving plan designs (HDHP,

narrow networks)• Premium steerage• Account contributions• Population health management• Low/no employer cost benefit

options

The ingredients get more expensive but the pie stays the same size

Health60%

Ancillary10%

Accounts10%

Retirement20%

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The Cost Imperative and Talent Attraction

• Employees increasingly want more personalization, which equates to the Long Tail of Benefits, but . . .

• The continued rising costs of health plans limit overall benefits program flexibility

• Likewise, HDHPs favor consumerism but pass along cost risks to employees

• Both can limit benefits administrators’ program design options

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Making Choice Work

Methods for increasing engagement and understanding:• Active enrollments• Choice architecture• Data-driven administrator and

consumer tools• Strong communication

strategies

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Active Enrollments DriveActive Decisions

The best way to drive engagement is to require it.

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Choice Architecture Encourages Personalization

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Total Available Options Matter as a Predictor of Elections

When more benefits are offered, more benefits are elected

Prob

abili

ty o

f Ele

ctin

g at

Le

ast O

ne V

olun

tary

Pla

n

Number of Voluntary Plans Eligible to Elect

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Placement Matters as a Predictor of Elections

Voluntary benefit election is highly influenced by enrollment location

Dis

tanc

e in

Pla

cem

ent o

f a

Volu

ntar

y Pl

an fr

om M

edic

al

Probability of Electing that Voluntary Plan

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Premium Burden Matters as a Predictor of Elections

As costs outside of medical premium increase (including dental, vision and life), the likelihood of voluntary/income protection policy elections decreases.

Prob

abili

ty o

f Ele

ctin

g at

Le

ast O

ne V

olun

tary

Pla

n

Total Non-Medical Annual Premium Elected

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Data-Driven Administrator Tools

• Claims data analytics are key to understanding annual spend, plan performance problem areas, population health and more

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Data-Driven Consumer Tools

• Claims data aren’t just for administrators

• Employees need transparency

• Enrollment is where transparency should start

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Communication Strategy Is Critical to Benefit Program Success

Plan early, use new tactics to create excitement about open enrollment

Benefit fairs that fit the family

Plan your nudges through OE,tailor them to avoid email fatigue

Videos are a great way to begin your campaign

Use multiple channels of communication

Ask your employees what they thought and stay connected

September October November DecemberAugustJuly

Some people prefer paper

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Making Choice Work for Talent Attraction

• Active enrollments, combined with smart choice architecture, lead to more and better benefit elections

• Data analytics, especially claims data, drives efficient programs, which in turn leads to more choices for administrators and consumers

• Communication is key in bringing together your enrollment and benefit program goals

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Key Takeaways

1The Choice ImperativeEach generation has different expectations of employment, work/life balance, benefits and technology—but they’re all consumers yearning for personalization. These needs present a “choice imperative” in benefits, which is addressed by broader, smarter benefits offerings.

3Making Choice WorkBringing together a new kind of benefits program requires new, technology-driven approaches that favor choice architecture, data-driven insight, and scale.

2The Cost ImperativeThese broader, smarter benefits offerings come with challenges—mainly balancing increasing costs with the need for personalization. Employers must seek new, technology-driven ways to address rising costs in order to see the rewards of personalized benefits for recruitment and retention.

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Thank you!

Questions?

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