Picwell Blog

For Employees: 5 Reasons You Hate Choosing Health Insurance Every Year

Jun 17, 2020 9:05:00 AM / by Picwell

When you choose a health plan, you’re making a complex decision for yourself and for your family - and as we all know, the benefits world is not easy to navigate. Most times you end up buying more insurance than you need in order to avoid risk and gain peace of mind. As a result, you could be paying up to $2000 more per year than you would in a plan that is better fit for your particular needs. 

There are many factors that play into your decision to commit to a more expensive healthcare benefits plan. In this blog we’ll run through several of those factors and show you how you can avoid making this mistake in the future and put your money back where it belongs - in your pocket.

5 factors that influence your healthcare benefits decisions:

  1. The Paradox of Choice
  2. The Prevalence of Complicated Options
  3. Struggling with Information Overload
  4. Getting Lost in the Math of Calculating Health Risk
  5. Your Own Misleading Psychological Biases

Let’s examine each of these factors in more detail and discuss ways you can overcome these challenges.

1. Paradox of Choice

While the ability to customize your benefits package is a great thing, being presented with numerous options at once often causes anxiety and decision paralysis, also known as the paradox of choice. As you’ve probably experienced, open enrollment typically includes choosing between several health insurance plans in addition to supplemental benefits like dental, vision, life, and/or disability insurance. 

To say the process is daunting is an understatement. While all of these benefits are intended to help, it’s completely normal to feel overwhelmed by the sheer number of decisions you’ll have to make. It’s likely you’ll ask yourself questions throughout the decision-making process like,

“Can I afford the high monthly premium for the top level of coverage?”
“On the lower premium plan, can I save enough to pay a deductible if I need a surgery?”
“How do I even know what my health risk looks like for the next year?”
“What the heck is disability insurance and do I really need it?”

The way the process is currently designed, there’s a ton of “what-ifs” and assumptions you’ll have to make, which doesn’t allow for much confidence in your decisions.

2. Prevalence of Complicated Options

To further muddy the decision making process, each benefit being offered comes with its own set of complicated terminology and fine print. Unless you’re in the HR and benefits field, you probably don’t understand many of the terms being used. For example, what is coinsurance? How about an out-of-pocket maximum? What’s in-network vs. out-of-network - and how do you know which is which?

Since each health insurance plan is comprised of hundreds of details like those listed above, there is no easy way to fully understand everything before making a decision. Taking it a step further, who could you even ask to explain these terms and provide assistance to make sure you are making the right choice? If you have a trusted HR representative who can sit with you for a few hours, that’s great, but most companies can’t provide such customized guidance.

3. Struggling with Information Overload

As if having too many complex decisions to make wasn’t enough of a challenge, you also need to wade through an enormous amount of benefits information in a hurry. Whether you’re a new hire or going through open enrollment, you will be expected to read through several emails from HR & Benefits, decipher the fine print in multiple Summary Plan Descriptions, and learn how to navigate their benefits enrollment system within a very narrow timeframe. Does it sound overwhelming? That’s because it is, and chances are, you won’t even know where to start. 

4. Getting Lost in the Math of Calculating Health Risk 

Even when you understand all of the benefits options available, there are still some unknowns you’ll encounter. When evaluating health plans and what is the best fit for you, you’ll still need to gauge how much medical care you might need over the next year. You’ll also have to determine how much that care will cost. This is what we mean by calculating your health risk.

In general, it’s not an easy task to assess what your future healthcare needs will be. And, even when you have a firm understanding of insurance plan costs, pricing for the same procedure can vary greatly. The bottom line? You can’t crunch the numbers if you don’t know what you’re tabulating and how each line item interrelates.

5. Your Own Psychological Biases 

When you attempt to predict your future healthcare needs, you run the risk of grossly overestimating your insurance needs. This happens often because most people (ourselves included) envision worst-case scenarios as inevitabilities, even though statistically that’s not the case.

As such, your desire to feel secure results in buying too much insurance, which is essentially throwing your hard-earned money away.

Further, when you’re overwhelmed, it’s human nature to want to get rid of your discomfort as soon as possible. This can lead to making no choice at all (which in itself is still a decision). You might fall back on the default option without digging deeper, or stick with the plan you already have because it’s just easier, or it feels “safe”. 

According to Aflac, 9 out of 10 employees keep the same benefits year to year, despite there being more appropriate options available.

So how do you overcome these challenges?

The fact is, most people are making costly errors when choosing health insurance plans. You need to find a way to make sense of your options so that you can overcome the obstacles outlined above. 

Luckily, there’s a simple solution.

That solution is decision support. Backed by artificial intelligence, effective decision support tools assemble and analyze health plan data in a way that everyday people can’t.

Here’s the technical explanation:
Benefits decision support tools, like Picwell DX, utilize predictive analytics to guide you to the best plan for your needs. They take your personal preferences into consideration and tabulate your probable level of risk using a pool of data from people like you. The tools then crunch the associated costs for each plan available, and provide a recommendation that’s the optimal combination of cost effectiveness and risk protection.

In layman’s terms: Benefits decision support tools solve all of the problems outlined above so you can get the coverage you need, while saving a substantial amount of money throughout the year (In fact, Picwell DX users save $1000 on average!)

The best part? The entire process takes less than 10 minutes, and you can do it from anywhere - your laptop, your desktop, even your phone! After using Picwell DX, you can be confident that you are making the best decision not only for your physical health but also for your financial health.

If nothing else, this year has taught us how important it is to be healthy, both physically and financially. So tell your HR and benefits team that you want Picwell DX, so you can make the right choices this coming open enrollment.

Topics: Open Enrollment, Benefits Decision Support, HR Tech, employee benefits

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Written by Picwell