As healthcare plans grow more complex, so does the challenge of understanding them. For many employees, navigating benefits during open enrollment can feel like trying to solve a puzzle without the picture on the box. And for employers, that lack of clarity among their workforce often leads to poor plan selection, higher costs, and preventable dissatisfaction.
With high-deductible options, tiered networks, coinsurance levels, and acronyms galore, it’s no surprise that many employees struggle to make informed benefits decisions. A 2023 study from Policygenius found that over 65% of employees could not correctly define "deductible" or "coinsurance"—two of the most critical concepts when comparing plans¹.
It’s not a lack of intelligence. It’s a lack of education. With real consequences.
Here is Karina Lupercio, our VP of Provider Network Performance & Vendor Management with her perspective:
According to the U.S. Department of Health and Human Services, low health literacy costs the U.S. healthcare system an estimated $106–$238 billion each year². This includes costs associated with delayed care, unnecessary ER visits, and poor chronic disease management.
And when employees don’t understand their coverage, they often default to the most expensive option, assuming higher cost equals higher quality. But that’s not always the case.
In fact, studies show that employees with higher health literacy are more likely to choose cost-effective plans and use preventive services which reduce overall employer spend³.
While employee education is critical, employers also need to understand their own benefits strategy. Too often, decisions are made based solely on premiums and spreadsheets, without fully grasping how plan design, provider networks, and member support work together.
The National Business Group on Health notes that companies with a better grasp of their healthcare ecosystem are more likely to implement successful cost-containment strategies⁴. That starts with education, not just during open enrollment, but throughout the year.
So, how can employers help improve health literacy for themselves and their teams?
Provide Plain-Language Materials: Replace jargon with simple explanations. Avoid assuming your workforce knows what “OOP max” or “formulary tier” means.
Offer 1:1 Support During Enrollment: As discussed in the video, meeting with employees individually can have a major impact. When someone takes the time to explain the options, the result is more confidence and better choices.
Train Managers and HR Teams: Your frontline leaders don’t need to be benefits experts but they should know enough to guide employees toward support.
Partner with Experts: A good broker or benefits partner can simplify the conversation for everyone. From plan comparisons to member education, their guidance can lift the burden.
Reinforce Year-Round: Health decisions don’t just happen in November. Monthly tips, webinars, and office hours can help maintain understanding and engagement.
Empowered Employees Make Smarter Choices: At the end of the day, health literacy isn’t just a feel-good initiative, but a strategic investment. When employees understand their options, they’re more likely to choose the right plan, use their benefits wisely, and stay healthier over time.
For employers, that means fewer surprises, lower costs, and a happier, more empowered workforce.
Sources:
Policygenius, 2023 Health Literacy Survey
U.S. Department of Health and Human Services, "Health Literacy and Health Outcomes," 2020
Journal of Health Communication, “The Association Between Health Literacy and Healthcare Utilization,” 2018
National Business Group on Health, "Employer Strategies to Improve Health Literacy," 2022
Centers for Disease Control and Prevention (CDC), "Health Literacy Basics," 2023