Health plan consumers don't understand what they are buying, report warns

Many Americans have recently used the open enrollment period to choose or change their health insurance plan, but a new report suggests many will have done so without understanding how plans work.

A survey conducted by the Employee Benefit Research Institute and Greenwald Research found that most people understand premiums and deductibles, but there is widespread confusion about prescription copays - only about one in four enrollees knew that the amount is not the same for all groups of prescriptions – and out-of-pocket maximums.

The report calls on employers to do more to support employees in deciding on the right plan, especially given that the survey identified that half of plan buyers spent less than one hour choosing including three in ten who spent less than 30 minutes.

Understanding was greater for health savings accounts than for high-deductible health plans and consumer-driven health plans, but even for HSAs only 32% of respondents were able to correctly answer at least three out of four statements vs. 22% of traditional plan enrollees.

“Simply, I believe we see, via the new survey results, that health insurance enrollees are taking the minimum time to make their health plan decisions.  More education is needed,” urged Paul Fronstin, Ph.D., director, Health Benefits Research, EBRI.

The research found that tax savings was the most cited reason for opening an HSA (56%), with 53% doing so to save for future health care expenses, and 52% to take advantage of employer contributions.

Despite the benefits of health savings accounts as tax-advantaged retirement savings tools, employees are largely using them to meet current healthcare expenses, according to a 2024 survey by the Plan Sponsor Council of America.

Most people (61%) with private health insurance get their coverage through their job and 20% do so through their spouse’s job. Just 19% buy directly through a health insurance carrier and only 8% through a government exchange.

Most people say they are satisfied with their health plan (and the care they get) but among those who are not, costs play a key role with 14% of enrollees not satisfied with the cost having paid out of pocket for prescription drugs, and 21% having paid out of pocket for other health care.

“Though satisfaction with open enrollment is high, there is an opportunity for employers to better educate their employees on their plan choices. The bottom line here is that health plan knowledge is generally low and employees do not spend much time making these decisions,” said Sara Rubinstein, director, Healthcare, Greenwald Research.

The stats seem to suggest that enrollment in HSA-eligible health plans is leveling off.