aequum LLC Advises Annual Enrollment Should Start Now: Be Proactive…as Passive Enrollment is so Passé

aequum LLC, acting on behalf of 325 self-insured health plans and their participants, recommends that employers with a calendar year plan year begin preparing for annual enrollment now. Employers who offer a choice of coverage options may be able to improve associate engagement by replacing a passive enrollment approach with an active enrollment strategy. A passive enrollment process leaves existing elections in place for the coming year - regardless of new options offered, increases in employee contributions and any changes to existing coverage.

Jack Towarnicky, member of aequum, says, “One of my benefits planning colleagues often noted that ‘people are inert.’ Status quo bias is evident when people prefer things to stay the same by doing nothing or by sticking with a past decision. This may happen even when a new coverage option or a change in coverage would offer greater value.”

Experiments in health plan enrollments show a great disparity in health coverage choices between new hires and existing workers. In one study, data shows a new offering gained wider acceptance among new employees, while few who had selected coverage in the past made a change. Status quo bias is consistent with loss aversion, explained by previously made commitments, sunk cost thinking, cognitive dissonance and regret avoidance – a missed opportunity.

Towarnicky continues: “It is a critical time to reconsider passive enrollment methods and take a proactive strategy. The COVID–19 pandemic has exposed a much larger segment of Americans who are financially fragile - unprepared for regular household expenses, let alone out-of-pocket medical expenses. Many workers living paycheck to paycheck have not set aside savings specifically earmarked for regular medical cost sharing – deductibles, copayments or coinsurance.”

We are now experiencing a period of rapid cost inflation – highlighted by the cost of groceries and gasoline. We expect renewed, higher levels of health care cost inflation to soon follow. So, renewals may include significant increases in the cost of coverage (premiums, contributions) and/or higher point of purchase cost sharing (increased deductibles, copayments, out of pocket expense maximums, etc.).

To counter renewed inflationary trends, it is recommended that plan sponsors focus on helping participants build savings rather than purchase more costly insurance. That would include adopting America’s most tax-favored benefit, Health Savings Account (HSA) capable coverage.

“One of the best strategies is to leverage HSAs as part of a ’health and wealth’ rewards strategy,” says Christine Cooper, CEO of aequum. HSA monies, including any employer contributions, are always “vested,” never forfeited. HSA contributions receive more favorable tax treatment than contributions to a 401k. And, unlike a Health FSA, HSA monies are invested and accrue earnings tax-deferred. Participants receive HSA monies tax free when used to pay eligible health care expenses. Capable of quadruple duty, HSAs cover out-of-pocket medical costs in current and future years, Medicare premiums, retirement income and survivor benefits.

Cooper continues: “Starting now means you have time to consider adding a HSA-capable option that would optimize both savings and financial preparedness – health and wealth.”

For support in managing plan design and administration, plan sponsors are benefiting from billing partnerships that provide data insights through software and data-driven solutions. Real-time price information of the true cost of care enables plan sponsors and members to make the most advantageous cost-benefit decisions regarding care and enrollment options.

“Our tech-driven team partners with health plans, providing administrative, technical and legal support to their members,” says Cooper. “Working together, we are advancing solutions to manage costs, reduce spending and gain potential savings.”

About aequum, LLC

Founded in 2020, aequum LLC serves third-party administrators, medical cost management companies, stop-loss carriers, employer-sponsored health plans and brokers nationwide to protect plan participants, improve employee satisfaction with their health care plans, and generate plan and participant cost savings. aequum LLC helps patients defend medical balance bills and brings savings to employer-sponsored health plans by providing administrative and other services to its partners. In addition, its sister organization, Koehler Fitzgerald LLC, provides legal advocacy to plan participants. Visit aequumhealth.com.

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