2018 WEX Health Clear Insights Report. Easing Workers Concerns about the Rising Cost of Healthcare

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1 2018 WEX Health Clear Insights Report Easing Workers Concerns about the Rising Cost of Healthcare 1

2 Contents OVERVIEW... 3 KEY FINDINGS CLEAR INSIGHTS CALLS TO ACTION Empower Employers to Provide Useful Plans and Resources Engage Employees to Grab and Hold Their Attention Educate Employees to Influence Desired Action Help Employees Set and Achieve Their Financial Goals METHODOLOGY CONCLUSION

3 Overview As a leading provider of healthcare financial management technology and services, WEX Health feels a sense of responsibility to continuously deliver more ways to help consumers be better prepared for healthcare costs now and in the future. Together with our WEX Health Partners, we collectively serve more than 300,000 employer groups and 25 million consumers across the United States and Canada. To ensure we direct this significant force on the things that will have the greatest impact in driving change, we commissioned Zogby Analytics to conduct an online survey of more than 1,000 U.S. workers with employer-provided health insurance to take a closer look at their views on benefit plans, how they choose and use their benefits, and how they leverage them or not as tools to help manage their household finances. Using this end-to-end view of attitudes, concerns, and behaviors, we identified key takeaways and top priorities for employer and consumer education. Key Findings Many are unaware of HSAs tax advantages and investment options Nearly half of the respondents perceive 401(k) accounts as offering the most pre-tax saving advantages; close to a quarter aren t sure. Just 13 percent identified an HSA as the account that provides the most pretax savings. More than half (54 percent) were not aware that they could invest their HSA funds in stocks, mutual funds, and other investment vehicles. And, three-quarters of respondents see their HSA as a way to pay for healthcare expenses this year, which indicates they may not be aware that funds can be carried over into the next year. All these answers add up to a significant opportunity for further education on the triple-tax advantages of HSA accounts. Were you aware you could invest your HSA? No 54% Yes 40% Unsure 7% 3

4 Quite honestly in regards to the health savings account, I m actually using it more toward a retirement savings. I don t really visit the doctor often or purchase prescriptions, so I m basically using it as another tax incentive type savings account. Male respondent, age 51 High deductible health plan participants feel they make smarter health decisions. More than three-quarters (82 percent) of those who participate in high deductible health plans (HDHPs) either somewhat or strongly agree that managing their healthcare spending account helps them make smarter health decisions. Almost three-quarters (74 percent) of respondents on these plans consider reduced monthly premiums when evaluating their health plan options. Then, the primary reason these respondents enrolled in health savings accounts (HSAs) in addition to their HDHP was to save for future healthcare needs (36 percent) and to have an ability to save for out-of-pocket and/or unexpected medical costs (29 percent). The responsibility to make healthcare decisions is definitely on me. They don t really offer much assistance. I just want to make sure that I m choosing the best plan for the future. I mean, I m young. I m OK right now. You never know what s going to come up, though. You want to make sure that you ve got great coverage and you re prepared. Female respondent, age 29 4

5 Unexpected healthcare costs are a significant concern. It should come as no surprise that nearly twothirds of those surveyed are somewhat or very worried about unexpected out-of-pocket costs of current healthcare needs or illnesses, and of those people, nearly half are also worried about the cost of healthcare in retirement. A quarter of respondents forgo healthcare services all the time or often due to associated out-of-pocket expenses. HSAs provide relief for some while others struggle to cover expenses. If faced with an unexpected health cost of more than $1,000, a third of the respondents with high deductible health plans would use their HSA account, while nearly 25 percent aren t sure how they would cover it, and 20 percent would put it on a credit card. My HSA has definitely been a learning curve, because at first, I had no idea how it worked. Like once I went to the dermatologist and they were like, You can try to run it through, and if they reject it, they reject it. We ll let you know. Men and Women Think Differently About Healthcare Spending Of the respondents on high deductible health plans, women are more likely (43 percent vs. 20 percent) to use their HSA account to pay unexpected healthcare bills greater than $1,000. Men are more likely to use personal savings (18 percent vs. 11 percent) and credit cards (28 percent vs. 15 percent) to pay unexpected healthcare bills greater than $1,000. Women tend to be more worried about finances. Of men, 14 percent are not at all worried about unexpected out-of-pocket costs, compared to just four percent of women. And women are more worried about expenses across the board current costs of healthcare (63 percent vs. 55 percent), home repair (38 percent vs. 30 percent), car trouble (41 percent vs. 33 percent) and paying for dayto-day living costs in retirement (44 percent vs. 34 percent). Men are more likely to use online investment tools (26 percent vs. 16 percent) and mobile investment apps (16 percent vs. 10 percent) when managing their household finances. Female respondent, age 29 5

6 Personalized online and mobile tools are best for education and engagement. Consumers are inundated daily with information from several sources and devices. Capturing their attention is challenging enough, let alone getting them to act. Knowing which tools and resources work best for different groups of employees can make a big difference in the effectiveness of education and engagement programs. During open enrollment, three-quarters of surveyed respondents spend less than an hour evaluating their employer s different healthcare options. It is imperative to make every minute count by tailoring educational tools to consumers specific needs. When asked to select all the tools and resources they would find most helpful, respondents ranked highest the tools that compare plans, estimate costs, and calculate savings, which is not surprising since they yield personalized results. Fact sheets were selected as the most useful of educational resources. In-person presentations during which employees can get immediate answers from human resources and benefits administration representatives ranked high, with more passive videos and webinars ranked lower. 6

7 Workers Select the Tools and Resources They Would Find Most Helpful 19 % 33 % 35 % 14 % 38 % 61 % 51 % 15 % 27 % 30 % Chart Key Multi-select question; respondents asked to select all that applied. Personalized, Online Tools Customizable, On-Demand Tools In-Person Presentation or Consult I feel like understanding and control go hand in hand, and because I don t get it all I don t feel like I have complete control, because I m not sure what s going on exactly. So just having more guidance, explanation and something that lays out in clear terms whether through a document, an , a PowerPoint or an app that would really explain things more and give me that control that I m hoping to get. Female respondent, age 27 7

8 The good news is that many of the things respondents said would help motivate them to use available tools and resources to make better health choices s, text messages, online goal trackers, and other online tools and resources can be personalized using WEX Health Cloud portals, business intelligence tools, and targeted consumer advanced messaging options. In addition, the WEX Health Cloud Mobile App delivers personalized insight 24 x 7 and allows consumers to manage their healthcare expenses with ease. Ways to Motivate Employees to Access Resources and Make Better Health Choices 11 % 21 % 8 % 33 % 43 % 64 % 23 % 38 % Chart Key Multi-select question; respondents asked to select all that applied. Financial Incentives Online, Mobile, Personalized, Automated Online Innovation Ideas Maybe I overlooked it; there might be [a mobile app]. That s something I ve been meaning to do, is to log onto my HSA website and just check my balances and all that. I haven t done that in a while. I bet they offer a mobile app or something, but I haven t set it up yet. Female respondent, age 29 8

9 People need help figuring out how much money to set aside. The most challenging part respondents cited in using their high deductible health plan was making sure to have enough funds set aside to cover deductibles and figuring out how much money to put in the account overall. Employees can use the personalized HSA Healthcare Savings Goal calculator in the WEX Health Cloud Consumer Portal home page to set their goal. The Consumer Portal also provides a dashboard containing interactive graphs that employees can use to see their spending trends year-overyear, by expense type, and by family member. This information can help them better predict how much money they should set aside. Managing bills received from doctors rated as another challenging area for respondents. The WEX Health Cloud Consumer Portal and dashboard also provide options for employees to request funds from their spending accounts, with options to remit payments directly to doctors or for employees to simply reimburse themselves for expenses that they already paid out-of-pocket. Employees can use the WEX Health Cloud Mobile App to scan a product bar code to instantly determine whether it is on the SIGIS Eligible Product List. This can be a big help to employees who need help understanding which expenses are covered and which are not. 9

10 What do you find most challenging about using your high deductible health plan? Managing the bills that I receive from my doctor Making sure that I have enough funds set aside to cover deductible expenses Figuring out how to use my HSA 14 % 29 % 9 % 21 % Figuring out how much money to set aside in my account Finding the best deals on care Obtaining investment guidance 10 % 5 % 13 % Not sure Chart Key Multi-select question; respondents asked to select all that applied. Financial Guidance Questions Benefit Account Functionality I guess it comes down to not knowing what I need to pay, like if there s anything out-of-pocket. I don t know how much I need to ultimately save up as far as finances, because I don t know everything of what s covered, what I ll need in the future. So, I m just always confused about how much money I have to set aside and that my health insurance isn t going to cover, so I need those finances to make sure I get the proper care I need. Female respondent, age 27 10

11 Clear Insights Calls To Action The calls to action in this section are designed to provide a framework for WEX Health Partners to use as they work with employer groups toward shared goals of helping employees get value from their benefit plans. Step 1 Empower Employers to Provide Useful Plans and Resources Employers are driven to offer cost-effective, competitive benefits that also help workers solve physical and financial health challenges so that they can be fully present and free from worries while at work. Using the WEX Health Cloud Employer Dashboard, benefits advisors can help HR and finance teams gain deep insights into usage trends. Analyze Enrollment and Spending by Plan and Expense Type; Compare with Other Employers Seeing breakdowns of plan enrollment and spending by plan and expense types can be very useful to HR, Payroll and Finance managers. Seeing comparisons to these enrollment and spending breakdowns in similar employer groups reveals considerations for future plan design and areas where addition education might be needed. For example, if an employer group notices their employees have contributions far below the average for certain plan types, they might want to dig deeper to understand why. Perhaps education is needed about the benefits of each available plan type, and what types of expenses are eligible. Understand Level of Employee Engagement; Compare with Other Employers Since employers can play such a key role in educating and helping employees make good choices for their physical and financial well-being, it is vital that they understand employees engagement levels. The WEX Health Cloud Employer Dashboard provides a Consumer Engagement Index that shows a weighted, aggregated measure from 0 to 100 of an employee population s interaction with tools available to them, such as the WEX Health Cloud Consumer Portal and WEX Health Cloud Mobile App. 11

12 Armed with this information, benefits administrators and advisors can help employers develop robust engagement strategies beginning with open enrollment education and continuing with personalized, event-based notifications, reminders, and other mechanisms that can be customized and automated using WEX Heath Cloud business intelligence tools. Step 2 Engage Employees to Grab and Hold Their Attention During follow-up interviews with survey respondents, we heard phrases like, maybe I overlooked it, they don t really offer much assistance, and I m just always confused. Employers must capture workers attention to be sure that important information is not only delivered, but truly understood. Personalize the Consumer Portal for Different Employee Populations or Individual Users Using the WEX Health Cloud Consumer Portal Messaging Framework, it is easy to create personalized experiences for groups of employees with common characteristics even down to the individual level. Employees who are age 55 and above can be shown eye-catching banner ads reminding them they can make catch-up HSA contributions. Employees who have not set up their address, logged into the WEX Health Cloud Mobile App, or opted in for at least one text message can be prompted with post log-in reminders to drive desired actions that and save employers time and money on printing, mailing, and administrative expenses. Dozens of built-in display rules are provided and can be customized and combined to target audiences down to a very granular level. Create a Customized Resource Library of Educational Materials and Tools Use the WEX Health Cloud Custom Resource Page in the Consumer Portal to help employers serve up educational, how to videos, fact sheets, resource links, FAQs, forms, customizable calculators and so on. Hundreds of customizable resources are available for WEX Health Partners in Partner Central to be used as a starting point for building robust employer and employee education and engagement programs. Step 3 Educate Employees to Influence Desired Action Many of the tools and resources respondents said would help motivate them to make better health choices are available today. Employers simply need help with activation and education. 12

13 Encourage Consumers to Use the Mobile App Usage of the WEX Health Cloud Mobile Application has grown steadily from 30,000 log-ins in April 2012 to 1.5 million in January 2018, with 55 percent more unique users, 50 percent more log-ins, and 65 percent more transactions. Consumers use mobile apps in nearly every other aspect of their lives why not their consumer directed benefited accounts, as well? If you don t yet have plans to get all your employer groups to go mobile, now is the time. Automate Personalized, Event-Based Messaging to Drive Desired Behavior Several options exist within the WEX Health Cloud platform to personalize the consumer messaging, notification, and reminder experience based on account events and other criteria. Examples of Desired Actions Set up a bank account Order dependent debit cards Upload receipts Go green Download the mobile app Enter cell phone number Enter address Examples of Automated Event-Based Messaging Options Enrollment confirmation Account statement Request for more information Claim confirmation Receipt reminder Request for more information Debit card purchase notification Step 4 Help Employees Set and Achieve Their Financial Goals Our survey respondents said they could use help figuring out how much money to set aside. When it comes to making more informed financial decisions, WEX Health provides tools for both employers and employees. Assess Employees Health Financial Viability Index Employers can gauge their employees capacity to pay for out-of-pocket expenses at any given time by viewing their overall Health Financial Viability Index on the WEX Health Cloud Employer Portal. The value is derived by factoring HSA contributions and disbursements since the beginning of the calendar year, including velocity of contribution and spending. This is one way to show progress as more employees engage in wellness and savings programs. 13

14 Educate Employers and Consumers about Helpful Financial Planning and Management Tools HSA Healthcare Savings Goal and Tracker Using the HSA Healthcare Savings Goal and Tracker, consumers can gain more control over their healthcare finances. Progress against goal is automatically calculated and displayed prominently as contributions and deductions are made, making it easier to stay on track. Investment Dashboard The Investment Dashboard, which is available on the WEX Health Cloud Consumer Portal, makes it easier for workers to track their HSA investments. The investment summary shows an overview of the portfolio and elections, including current balance, recent activity, and rate of return. Detail filters include: portfolio performance, balance history, fund activity, and transaction details. HSA Advance Some workers are new to high deductible health plans and the stress that can accompany unpredictable out-of-pocket expenses. Employers may choose to provide a safety net by enabling HSA Advance functionality that allows employees to borrow against future HSA balances to cover unplanned expenses. Methodology The more than 1,000 adults who were randomly invited to participate in this survey were selected to best represent the demographics of the population being surveyed using information based on census data, voter registration figures, CIA fact books, and exit polls. Weighted variables may have included age, race, gender, region, party, education and religion. Each invitation was secure and password-coded so that respondents could only access the survey once. Based on a confidence interval of 95 percent, the margin of error for the respondent set is +/- 3.0 percentage points. This means that all other things being equal, the identical survey repeated will have results within the margin of error 95 times out of

15 Employment Status 93 % Full-time Marital Status Married Single Single w/dependents 2.9 % 12 % 54.5 % 26.8 % 7 % Part-time Divorced, Separated, Widowed Civil Union, Domestic Partnership 3.8 % Number of People In Household Number 20 % 32 % 21 % 16 % 6 % 4 % Health Plan Enrollment Breakdown 16 % 7 % 45 % 29 % 4 % of People In Organization 20 % 13 % % % % 10% 7 % 8 % HDHP POS PPO HMO Unsure ,000-4,999 5,000-9,999 Unsure Conclusion Despite improvements in consumer confidence regarding their healthcare choices and the greater responsibilities they have in managing their health plans and expenses, there is a critical need for tools that can both educate and prepare workers to better prepare financially for out-of-pocket healthcare expenses. Employers can play an even greater part in helping to enable their employees to feel more confident in their ability to manage their expenses both now and for their future retirement plans. This need, along with WEX Health Cloud business intelligence and personalization tools, creates clear opportunity for WEX Health Partners to help grow workers financial health along with their consumer directed healthcare businesses. 15

16 About WEX Health We simplify the business of healthcare through WEX Health Cloud, a cloud-based healthcare financial management platform that drives efficiency for benefit administration technology, consumer engagement, and advanced billing and payments. Our partner organizations enable us to deliver our industry-leading and award-winning solution to 300,000 employers and more than 25 million consumers. Together we take the complexity out of defined contribution, HSAs, HRAs, FSAs, VEBAs, PRAs, premium billing, public and private health insurance exchanges, COBRA, wellness plans, and transit plans. Learn more at www. wexhealthinc.com, and follow WEX Health Simplifying the Business of Healthcare 16 Copyright 2018 WEX Health