Made-To-Order Benefit Packages?

New research finds millennials may need to be persuaded to join their organizations' health plans. Here's how HR can help raise enrollment rates among this demographic.

Monday, July 22, 2013
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Experts say today's typical younger workers expect hyper-customized products (think nonfat, organic hazelnut latte with extra foam and a light cinnamon sprinkle), look for parental and peer input on their decisions and connect around the clock with friends through social media on mobile devices.

They're also significantly less likely than their older coworkers to opt in to employer-sponsored benefit plans, according to a new study by the ADP Research Institute.

The report identifies millennials and low-wage workers as facing the greatest healthcare challenges. The data shows that, in 2013, only half of employees under age 30 who were eligible for health benefits chose to participate, compared with participation rates of 70 percent or higher in groups of employees 40 and older. eligible for health benefits, more than 75 percent of full-time employees chose them in all age groups, except those under age 30, according to ADP's inaugural Annual Health Benefits Report, comprised of data compiled from more than 600,000 employees at U.S.-based companies.

Christopher Ryan, vice president of strategic advisory services at ADP, says one explanation for the under-30 trend may be the provision of the Affordable Care Act that enables dependents up to age 26 to stay on a parent's health plan.

Workers under age 30 also were hit with the largest percentage increase in premiums (16.3 percent) over the last four years, the data shows, and Ryan says that result may be linked to a decrease in eligibility for that age range, as well as an aging workforce creating higher premiums overall for entry-level workers.

He says companies that want to sustain high quality, competitive health benefits over the long run need to start thinking about the health and diversity of their workforce risk pool, as well as engage younger employees to actively participate in health benefits.

"Engage all employees to adopt and sustain a healthy lifestyle," he says, "and become intelligent consumers of healthcare early on and offer a consumer-directed health plan alternative that provides young people with an option to enroll in coverage with the lowest premium outlay relative to income."

Why is this so important?

"The business impact is significant for both fully insured and self-funded group health plans," he says.

Employers need to act quickly to attract younger workers to opt in, Ryan says, especially in light of changes tied to the implementation of the Affordable Care Act.

"In the future," he says, "company health plans will have to compete with public health plans to attract a high-quality risk pool, and to maintain overall health premiums low enough to avoid the excise tax imposed by the Affordable Care Act in 2018."

To reach out to millennials, employers will have to transform traditional enrollment communications to something that speaks to a younger generation, says Steve Wojcik, vice president of public policy at the National Business Group on Health in Washington.

"They are looking for a lot more flexibility and variety," Wojcik says. "One size fits all may not work."

Benefit packages designed to meet the needs of the under-30 workforce should incorporate social networking and mobile technology and include offerings that acknowledge work-life balance, he says.

"One of the things we probably should do is re-package the EAP program," Wojcik says. "There's a stigma to it, but it is a resource to help with the complexities of today's lifestyle and trying to juggle in this 24/7, 365-day a year situation where you don't have any downtime."

Of course, affordability plays a role, too, he says.

"As healthcare costs are going up, there has been a trend toward income-related plans. This might be particularly helpful for new entrants to the workforce who may be on the lower end of the pay scale. That might entice them to sign up and enroll."

HR departments should take a cue from marketing, says Rhonda Newman, who leads Mercer's communication practice for North America.

"Generation Y employees are consumers out in the public world, but they are also consumers of what a company has to offer from an internal perspective, too," she says. "It makes sense to employ some of those same consumer approaches internally."

Newman says workers from the under-30 age group, which Time magazine recently dubbed the "Me, Me, Me Generation," are accustomed to information at their fingertips and a world that revolves around them.

"We are seeing employers sending benefits information through text messages or mobile websites, anything people can tap into with a smartphone or mobile tablet," she says. "That's how that group likes to receive information.

"I think if you look at some of their attributes," she says, "they are constantly influenced by their friends. Companies are sharing information -- or creating challenges where people can do things together as a group -- and providing forums for them to share ideas and thoughts among their friends. Companies that leverage that group-oriented mindset are the ones that will be successful."

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This generation is also heavily influenced by their parents, more so than other generations, she says, so the next wave in selling to Generation Y may involve marketing to parents, a technique employers may want to consider.

New York-based author and corporate consultant Lindsey Pollak says Generation Y's reliance on parental advice can be used in how employers present benefits information to millennials, too.

"Gen Ys want parental advice," she says. "Raised by the highly involved Baby Boomers, Gen Ys have felt special from day one and many consider their parents to be their best friends. This poses a challenge in the benefits arena, because, for most Baby Boomers, benefits -- including health insurance, disability insurance, life insurance and pensions -- were often simply provided by employers.

"Now, Gen Ys have an array of choices and can't turn to their parents for help because their parents don't know how to advise them," she says. "My advice to employers is to make sure that your benefits education and your benefits enrollment process is 'parental' and 'coach-like' -- showing Gen Ys that you want the best for them and want to coach them on how to choose the right benefits."

Pollak also says employers can look to retailers on how to effectively communicate with younger workers.

"Gen Ys want customization," says Pollak. "We have seen this trend in consumer marketing for a long time -- think Build-A-Bear Workshop, personalized Nikes, over-the-top Starbucks orders -- and now it is dominating the workplace. Employees want to customize their job descriptions, titles, work schedules and, increasingly, their benefits."

Pollak is partnering with The Hartford on the investment and insurance company's "My Tomorrow Campaign," an initiative created to target the under-34 crowd, whom the company found reluctant to purchase life and disability insurance. In research conducted in 2012, The Hartford found that only one in three workers ages 18 to 34 said they completely understand life insurance and only 24 percent feel they completely understand disability insurance.

The campaign incorporates an educational website with a "real-world roadmap" to guide millennials through career, financial and insurance options in various life stages as well as other interactive communication, such as regular Twitter chats with Pollak.

Employers also may want to create easier access to information and more of it, she says.

"The challenge is that Gen Yers want a lot," she says. "I'm stereotyping a bit here, but generally they want as much information as possible, they want that information customized to their unique needs and they want that information available to them 24/7/365, e.g., through texting, online chat, phone or social media, depending on how they are seeking the information at that moment."


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