Practice Management
Third party administrators (TPAs) have an important role to play in improving employees’ comprehension of the benefits their employers offer, a recent white paper argues.
In “Addressing Education Gaps Is Key to TPA Growth” DataPath discusses what it found in an August 2019 survey that concerned employees and how much they know about their benefits. The paper also makes suggestions regarding how their knowledge may be increased. While the study concerns employees’ grasp of health benefits, the paper still is relevant regarding other benefits, since it addresses how TPAs may improve employees’ comprehension of their benefits and engagement with a plan—including a retirement plan. And that can enhance the plan’s effectiveness and their preparedness for retirement and future financial security.
There are more health benefit options available than ever before, yet that does not translate to effective use of them, says the paper. It notes that research suggests consumers are not taking advantage of their benefits as well as they could, which DataPath attributes largely to poor knowledge and understanding about those benefits. And this, they say, is due to factors such as a great abundance of insurance options, IRS rules, limits on contributions and spending, terminology and acronyms.
DataPath says that slightly more than 50% of employees in their survey said they were confused sometimes about how their benefits work, and cites a variety of other studies to support their thesis.
- The National Bureau of Economic Research reports that it found that employees generally selected health plans that were not cost-effective when compared to what they actually spent.
- Confidence is low among 19% of employees that they understand their health coverage, AFLAC reports.
- More the one-third of younger consumers do not understand the advantages and disadvantages of their health benefits very well, C Space Health found.
- More than 60% of employees say they cannot look to their employer for answers to questions about their health care, reports Maestro Health.
- More than 80% of workers told Guardian Insurance that they understood their benefits, but just 49% were correct about that when Guardian tested them.
DataPath argues that the confusion concerning how health benefits work “points to a major systemic problem” in how such benefits are delivered. And that problem, they say, is education; they argue that increased effort by employers and administrators to educate participants regarding how their benefits work would go far in dispelling their confusion.
Opportunity
DataPath argues that “For third party administrators, understanding where the gaps exist and providing solutions to address them is key to client satisfaction and business growth.”
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