How To Control Finances By Improving Health Care Literacy

Key focus areas for employers and employees

One often overlooked component of financial literacy is the impact of health care coverage (or the lack thereof) and the cost of health care itself. According to the Kaiser Family Foundation, one-third of people with employer-sponsored health coverage couldn’t afford an unexpected bill over $500. And even before Covid-19 became rampant, one in four Americans were skipping health care due to cost.
 

As employees begin to schedule, or reschedule, health care visits that may have been put off due to Covid-19, it’s important to address the impact financial literacy can have on good health—and how health care literacy can improve an employee’s financial security. Here are some areas you and your employees should focus on:

1. Learn the “Economics” of Health Care

Most consumers don’t really understand how health care coverage works. From broad concepts—such as the actual cost of coverage, the percentage of premiums the employer covers, self-funding vs. insured coverage, and how group coverage compares in cost to individual coverage—to specific terms and concepts like deductible, copay, coinsurance and network, most employees are at a loss. Employees need to understand how their choice of coverage option (and who they cover) will affect their premiums—and why choosing a plan based on premium alone may not be their best option. And, finally, employees need to understand how their share of the cost of the care they receive is affected by their deductible, coinsurance and network status—and how their choices when they need care can affect their out-of-pocket expenses.

While consumers often feel confident they understand terms related to the core elements of a health plan—such as copay, deductible and out-of-network—the reality is quite different. In fact, according to DirectPath’s 2020 Consumer Report, almost one-third of consumers are not certain how concepts such as coinsurance, premium and allowed amount apply to their coverage. And a PolicyGenius survey found that 98% of Americans actually can’t correctly define deductible, copay, coinsurance and out-of-pocket maximum. 

When consumers understand key concepts and terminology of health coverage, they can better learn how to use their health plans more cost-effectively, especially to minimize out-of-pocket spending. Employers should provide year-round communications and resources that educate employees on choosing and using their health plans. Not only will it save the employees money but it will also help employers cut costs.

2. Promote Tools and Resources That Help Employees Save

Most employers offer one or more tools to help employees reduce their health care costs. Whether it’s the opportunity to set aside money on a tax-advantaged basis through a flexible spending and/or health savings account, incentive programs that enable employees to earn premium reductions or contributions to those tax-advantaged accounts, employee assistance programs, onsite clinics or other programs, it’s critical that employees are aware of what’s available to them. 

One increasingly popular resource is advocacy and transparency services. Despite the fact that the cost of any given treatment or service can vary by hundreds, if not thousands of dollars, a whopping 68% of respondents “sometimes,” “rarely” or “never” compare treatment or service costs from different providers, according to DirectPath’s 2020 Consumer Report. Of those who say they “never” compare treatment or service costs beforehand, 67% said they didn’t know they could. Thirty-one percent of consumers who did compare costs saved more than $500 on a single service or treatment. 

Advocates can support employees as they shop for health care, helping them to identify which providers are in network, and which provide the best care at the best price. Advocates can also help navigate surprise medical bills if they do result from shifting hospital pricing and network changes. Transparency services provide cost comparison reports when employees need care—highlighting the different options, providers and prices available to them—enabling consumers to make the most cost-effective choice.

3. Demonstrate How to Save on Prescriptions

Nearly one in four Americans struggle to pay for their medications, according to an analysis by RX Savings Solutions. For people concerned about being able to afford the medications they need—even with insurance—learning how to find a better price without compromising quality can be a game-changer. 

Many consumers assume that the cost of prescription medications is the same no matter where you go– yet this couldn’t be further from the truth. As with other health care expenses, the price of a prescription drug can vary dramatically depending on where consumers buy it, according to a report by the U.S. Public Interest Research Group. And sometimes, paying cash is the best approach. 

To ensure they are getting the best price for their prescriptions, consumers should start with free online tools such as WellRx.com, GoodRx.com or SingleCare.com—prescription drug comparison sites that allow consumers to shop by ZIP code and often offer their own discount programs or coupons. And consumers should be sure to ask their pharmacist for the best price available—they can often find deals the average consumer isn’t aware of. By making cost comparisons a practice, people can save hundreds of dollars a year.

Information is power when it comes to health care—and financial—literacy. The more education, resources and transparency around health care, the smarter consumers can be with their spending. As finances continue to be a point of stress for employees, employers can step up and give employees the support they need to ensure health and financial wellness for themselves and their families in the year ahead. 

Kim Buckey serves as a Key Advisor and Senior Subject Matter Expert on employer-sponsored benefits and communications. She founded DirectPath’s compliance and communications team, which provides strategy, content development, and managemetn services that drive business results through effective communications. Kim works closely with sales, marketing, and product development to explore the potential impact of new regulations on customer segments, and to develop new products and services to support current and anticipated needs. Visit www.directpathhealth  Connect Kim Buckey Follow @SPDkim