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June 3, 2025
Poor health insurance literacy among plan enrollees costs both them and plan sponsors billions of dollars each year, according to a new report by Cigna Healthcare.
According to the report, Americans with poor knowledge of how their health insurance works are twice as likely to be stressed about their health, which can worsen any health problems they are struggling with. This can also affect employers through decreased worker productivity, increased absenteeism and turnover and other indirect costs.
There is also a disconnect between employers and their plan participants: 80% of plan sponsors believe that their staff understand their benefits, while 66% of employees find it difficult to know which benefits to use and in what circumstances.
The report’s finding that employees who are confused about their benefits may suffer worse health outcomes should spur employers to ensure they are getting their money’s worth by emphasizing employee education and support.
“Employers invest in health benefits because a healthy workforce is imperative to organizational performance and growth,” the report said. “For maximum ROI, employees and their families must use those benefits effectively. Employee utilization and engagement data can help employers address gaps.”
Cigna found that of those who reported being stressed about their health often or very often:
- 50% had missed one or more days of work due to physical or mental health,
- 49% had come to work feeling sick,
- 50% said they were not mentally present while at work,
- 34% were unable to perform at an optimum level, and
- 49% often or very often found work stressful.
On the flip side, the 20% of workers who reported being confident in their health insurance knowledge were also healthier and had fewer medical concerns than those who were less informed, the report states.
The report found that those in the top 20% of health insurance literacy were more likely to positively rate their physical and mental health compared to those with a limited understanding of their benefits. They were also more likely to be more proactive about their health by taking steps to:
- Research and compare health plans,
- Seek out regular preventive care,
- Manage chronic conditions, and
- Stick to prescription regimens.
What employers can do
In light of the study’s findings, it’s clear that employers should boost health insurance literacy among all staff, not only for their employees’ health and finances, but also for the firm’s finances, productivity and office morale.
The report recommends that employers focus on three areas:
Educational programs: Hold regular in-person health engagement sessions that give staff the opportunity to ask questions and learn about their benefits. Some employees may benefit more from sessions like these if offered as webinars or online courses that educate them about their health benefits.
Interactive tools: Provide interactive tools that can guide your employees when making plan decisions. These are often available through the insurance company and can include:
- Plan comparison tools — These online platforms can be used during open enrollment to help employees and their families compare plans based on premiums, coverage, doctor networks, out-of-pocket expenses and maximum limits.
- Cost calculators — These online or app-driven tools allow employees to estimate their out-of-pocket costs for various medical services and treatment options.
- Benefit portals — These online or app-driven tools can help your staff make decisions about their health care and how insurance will help pay for it.
Provide support: Create an environment where your workers feel comfortable approaching HR with questions about their health insurance benefits. Designate one or more team members as point persons for these interactions and emphasize to staff that the department has an open-door policy.
Finally, as your broker, we can also help educate your workers and provide resources that help them make better decisions.
