One Place 2017 | The State of Employee Benefits 2017

Kevin Hamilton, Benefitfocus senior vice president of marketing, moderates a panel discussing the key trends revealed in our State of Employee Benefits 2017 research.

 

Transcript

Kevin: Good afternoon, everyone. My name is Kevin Hamilton, Senior Vice President of Marketing here at Benefitfocus. We're thrilled to have you guys here at One Place with us today. Welcome to Orlando. If you could, please give my esteemed panel a warm welcome as they come on out. Come on out guys.
 
We've got a great session planned for you today. With this team, we're going to give you a guided tour of the Benefitfocus Data Cloud as it relates to both employer plan design and employee behavior on the Benefitfocus platform. But before we get started, I'd like to give the panelists an opportunity to introduce themselves. We'll start with Jessica.
 
Jessica: Hi, everyone. I'm Jessica Ward. I'm with DSW. We sell shoes. Oh, thank you.
 
Kevin: Everyone's preferred shoes.
 
Jessica: We have about 500 stores across the country and in Puerto Rico. We're in 43 states. We also have an expanding online presence in the marketplace space, as we've recently acquired a company called ShoeMetro that serves eBay and 40 other marketplaces across the world. And recently we also acquired ownership in Town Shoes, which is a Canadian brand. I'm the Senior Manager of Benefits and HR Systems, and I've been with DSW for about three years and have been a client of Benefitfocus for about two-and-a-half.
 
Logan: Hi, everyone. My name is Logan Butler, and I am a marketing content strategist at Benefitfocus. I've been with the company since 2013, and I have the privilege of being the lead writer for The State of Employee Benefits. I'm also recently married, so I'm quickly learning the importance of shoes.
 
Jessica: Very important.
 
Logan: So I'll probably be…
 
Jessica: Very important.
 
Logan: …spending a good deal of money at DSW over the next several years.
 
Jessica: There is a great new DSW in Charleston. 
 
Logan: Fantastic.
 
Jessica: Yeah.
 
Jen: Hi, everybody. I'm Jen Clark. I'm the resident millennial. I'm also a data scientist at Benefitfocus. I have been with Benefitfocus for about three years now, and I have the awesome pleasure of working with our Hadoop engineers and our business intelligence engineers, and taking all the great tools that they build like the Data Cloud and turning it into insights for not only Benefitfocus but for you all as lead researcher for State of Employee Benefits.
 
Jeff: Good afternoon. I'm Jeff Oldham, Senior Vice President of the Benefitstore. So the Benefitstore is a consulting team that focuses on consumer-related benefits tied to financial wellness or digital health or income protection. I'm also pro-shoes if that helps. But otherwise, thanks for coming to the session.
 
Kevin: Great. Well, as I mentioned, we've got an exciting session for you guys today. And, you know, it all starts with where we are today as benefits leaders. We know that many of you have just wrapped up Open Enrollment, and you're already starting to think about Open Enrollment 2018, believe it or not. We know that about this time of year you often turn to a team of consultants and trusted brokers. You may rely on employee surveys to inform how you think about your plan design for 2018, as well as industry surveys that may rely on self-reported data from employees to inform how you think about plan design for the upcoming year. 
 
Last year here at Benefitfocus, we introduced a fourth tool, The State of Employee Benefits. It's a research series based off of actual employer plan design and employee behavior on the Benefitfocus platform. We published the first study this year in January, and we're going to spend some time today talking about some of our findings as it relates to employers with more than 1,000 employees. We're also going to share with you for the first time today some industry analysis on some of the key industries that we're focused on, and some of the large industries that make up the Benefitfocus platform. And then finally, on an ongoing perspective, we're going to publish some supplemental deep dives that will look at regional differentiation as well as demographic segments. So we'll do a study focus just on millennials, for example, and what are millennials doing on the Benefitfocus platform. So with that, why don't we go ahead and get started.
 
This year's study was an exciting study. The enrollment data covered more than 500 large employers across 20 industries. And, you know, our first question, Jen, what's unique about this study?
 
Jen: As Kevin just said, there's over 500 large employers, 20 industries represented. As you see here the top three are healthcare, manufacturing, and retail. And that really wide breadth of industries represented more than twice that of a typical survey, really gives us some great insights that doesn't normally get studied.
 
Kevin: And why is the study's diversity important when it comes to research?
 
Jen: There's all these consumers that don't normally get a voice, and we have a great opportunity to bring it to you because it's being captured by our Data Cloud, so it's really fun.
 
Kevin: Now, what's really powerful about The State of Employee Benefits research is that it's not based on self-reported data from employees. This is actual employee behavior on the Benefitfocus platform. And as you think about the investment that we've made over the past few years in the Benefitfocus Data Cloud, what this allows us to do is we're actually looking at employee choice. So we know that an employee was choosing between a PPO and a high-deductible health plan, and they actually elected a high-deductible health plan. Jen, how does this study compare to other industry surveys that you might have access to?
 
Jen: Yeah. So when I see this slide, I get really excited. And this year only, we were able to study over 1 million enrollment transactions representing 4 generations of the U.S. workforce. And that sort of power is a great opportunity to just give all these great insights back to you guys. And it's the largest study of its kind.
 
Kevin: You know, one of the things that we did do is we made a distinction with millennials. Why did we make that distinction between under and over 26?
 
Jen: It was really important for me as a researcher to sort of break out people who could be covered by their parents versus someone that had to buy coverage for the first time on their own. And as you'll see, their behavior is quite different. So we made sure to differentiate that.
 
Kevin: And Jessica, from your perspective as a large employer, when you look at the make-up here from a demographic perspective, this is similar to DSW's workforce that you're engaging?
 
Jessica: It is, although our millennial swing is a little bit more. For our total population of part-time and full-time, 76% of our population is millennial. And a larger portion of that is actually under 26. But for our full-time benefits-eligible, it still makes up 56% of the population. And we do see trends very similar to what Jen's speaking about, especially that under age 26, our opt-out rate is higher, and their behaviors are very different.
 
Kevin: Very cool. So today we're going to look at a couple of key themes that emerged during Open Enrollment 2017. The first that we want to spend a little bit of time on is around this idea of employee choice. Employee choice is alive and well in the Benefitfocus platform. And in fact, consumer-driven health care is as well, 60% of large employers on the platform now offer at least 1 high-deductible health plan. And Logan, what surprises you from a plan design perspective?
 
Logan: Yeah, well, despite what I guess you can call the dwindling threat of the "Cadillac tax," employers are still looking to cut costs on their health plan. And HDHPs are a great way to help them do that. Last year we saw that 52% of our large employers on the platform offered at least 1 HDHP in addition to the traditional PPO, HMO, EPO, etc. You know, this year that number has bumped up to 56%, and then when you add the 4% that have gone full replacement offering HDHPs exclusively, you see that essentially 3 out of every 5 employers are offering HDHPs now. So they're definitely taking hold.
 
Kevin: And Jessica, does it surprise you that 40% have yet to offer a high-deductible health plan?
 
Jessica: I don't think so. I think a lot of it has to do with the geographic dispersion of your associates, the culture within your company. If you're a more paternalistic culture, if you have unions, manufacturing, and just that overall competition that you're dealing with. Whoever is signing up for HPHPs, if you're seeing that in your local market or within your industry, you're more likely to follow suit. You know, retailers, restaurants were more early adopters, and so we see a lot more in our space, but I think it still goes back to that overall culture and giving folks choice.
 
Kevin: And Jeff, from your perspective, so 4% of large employers have gone full replacement. That's up slightly from 3%. Do you think that trend will hold steady or increase over time?
 
Jeff: You know, when it comes to full replacement, it's sort of like the equivalent of calculus from a communication perspective. If an employer doesn't want to do it or doesn't have to do it, I'm sure they're going to delay that. Logan definitely touched upon the fact that Cadillac tax has been extended. So it's not terribly surprising that that number remains relatively flat versus last year.
 
Kevin: Now, one finding that we haven't yet published but we'll publish soon is around industry adoption and some of the shifts we're seeing in specific industries as they introduce new plan designs and in particular high-deductible health plans. A few industries saw a dramatic increase in terms of the percent of employers that offered one education, healthcare, manufacturing, but retail was flat roughly every year. Jessica, maybe you can spend some time here and share with the audience your approach to plan design at DSW.
 
Jessica: Sure. So we've really followed a choice-based option over the last several years. In 2011 we implemented an HSA for the first time, and we really kept it simple. Two choices, a PPO or an HSA. Still seem simple, probably very complicated for most. And we have learned from that over the years. With our plans, they are the exact same plan structure. It's truly about that choice of how you pay for it. Do you pay for it out of your paycheck or do you pay for it at the time that you go to the doctor? And we really talk about that choice, that cash flow conversation. You know, can I afford to have a $300 visit to the emergency room or do I need a copay? So those are the kinds of decisions that we offer to our associates. And we have maintained that status, although we have shifted away from the HSA, somewhat of a unpopular decision for a small group of associates at our office, to favor an HRA design that offered us a little bit more flexibility. Although I have a feeling we'll probably swing the pendulum back a little bit more and add the HSA back in in the next couple of years as that continues to be more favored in tax status.
 
Kevin: And you introduced, I guess the HDHP or CDHP program or plan design in 2011. What advice would you have for those in the room who perhaps haven't offered one yet or thinking about it for 2018?
 
Jessica: Really, the biggest message is communicate early and communicate often. And if you attended the HR Market Tech [SP], which was a completely sold-out crowd in there. They had to bring in extra chairs, there are some great resources that are available. You have to have a multimedia strategy because you won't get that message out in one piece. As the folks at Benefitfocus told me is called snackable…
 
Kevin: Snackable content.
 
Jessica: Content, yes. Thank you.
 
Kevin: I think Logan gets credit for that, not me. 
 
Jessica: Okay, yeah, so.
 
Logan: Joan Damico.
 
Jessica: All right. So Joan [SP], Joan said it earlier as well, but I think having those bytes of information and having it available in the moment that someone's trying to use their plan when they're signing up for the first time and then continuing to push that message throughout the year is really a mission-critical option. You can't stop at the end of Open Enrollment and not say anything until next October. You've gotta keep that message alive and well throughout the year.
 
Kevin: Now, one item that we often talk about a lot at Benefitfocus is this concept of plan fit. It's not about moving employees in mass to a high-deductible health plan but instead helping employees select the right plan based on their financial circumstances and health care needs. So one of the things we're always interested in taking a look at is from a demographic perspective where are we seeing plan adoption? What you'll find is millennials and Gen Xers are really driving HDHP participation. Older employees are self-selecting into PPOs and the more traditional plan designs. Logan, why do you think it is that, you know, millennials are self-selecting into these plans?
 
Logan: Yes, I mean, we're obviously continuing to see age play a significant role in plan selection and millennials obviously, you know, making up the bulk of the HDHP participation we see on our platform. And kinda continues this idea that we've talked about of how HDHPs go along with a lower health care risk as well as, you know, presumably lower income if you're a younger worker. You know, HDHPs definitely appeal to this idea that many millennials have themselves, and myself included, as, you know, invincible, you know. And if something hurts, you know, you just take a Tylenol, right? I should probably have one of those, like, disclaimers, kids, don't try this at home. But, yeah, we just don't expect ourselves to need health care as much, right? And then on the other side, you know, they offer a cheaper option to your traditional PPO plans in terms of the amount that's coming out of your paycheck every month. And that can be certainly attractive to younger workers who have less in that paycheck, to begin with.
 
Kevin: And, you know, Jeff, when you think about employers, millennials represent 37% of the workforce, at least in the context of this study, how do you think that'll shape plan design in the future?
 
Jeff: Yeah, it's interesting. I think millennials are going to have an enormous influence on not only plan design but also bringing in new benefits above and beyond sort of "insurance." So if you're a millennial in this instance and you're a CDHP then chances are you're looking to one, pay off your student loan, two, perhaps you're looking at more of a digital health offering as opposed to go into brick-and-mortar. We see financial wellness, digital health millennials really pushing the envelope on benefits to look at benefits sort of beyond your stereotypical benefits that are typically offered by employers.
 
Kevin:
Now, new for 2017 was the opportunity to layer in salary data into the plan election behavior, and one thing that we did quickly see is that it appears that income plays a significant role in plan selection. Would you agree, Jen?
 
Jen: Yeah, absolutely. This is something that we sort of discovered in a deeper dive as we looked at last year's data, and that age, as we just saw, and salary plays a significant role in plan selection. And people in traditional plans we found on average are lower-income workers, and people in HGHPs, on average again, are those higher-income workers. And that gap widens with age, which was really interesting.
 
Kevin: And why do you think that is?
 
Jen:
Well, I think older higher-income workers really understand the tax benefits of an HDHP with an HSA. They have more out-of-pocket money in case of an emergency, whereas those lower-wage workers might see as Jessica pointed out earlier, you know, sort of that prepayment of a PPO, whereas that may not always be the case for their plan design, but they may be viewing it as such, and just more protection for them.
 
Kevin: And Jessica, you work in an industry with I guess lower than average wages, what's your perspective as it relates to this?
 
Jessica: So I echo a lot of what Logan and Jen have both said. So Logan talking about the invincibles. We talk about them quite a bit. But I think that on the opposite end, with those that do make a little bit more, they tend to be a little bit higher-educated. They also tend to know what their own risks are, what their families' risks are, and they're able to say, "I'm going to set this money aside." Whereas those younger generation typically don't even know what they don't know. They don't know how much it's going to cost to go to the doctor. They don't know what to expect for their own health. And so, you definitely see some resistance for those that just don't even have a decision. They're usually making it more on the price tag out of their paycheck than kind of that overall package.
 
Kevin: And, you know, that probably leads us into a good conversation around from an employee perspective, what are we seeing, both from a plan design perspective and some of the costs that they're confronted with. During Open Enrollment each year, one item that surprised us in 2017 was that we actually saw a relatively significant increase in high-deductible health plan premiums in 2017. And Logan, they increase on average about 8%, what's significant about this increase from the employee perspective?
 
Logan: Well, I mean, if you're talking about someone who's enrolled in an HDHP, you know, they're already experiencing these significantly higher costs when they use healthcare throughout the plan year, and then suddenly, they go to Open Enrollment and the amount that's going to come out of their paycheck has risen as well. So they're kind of getting hit with a double whammy there.
 
Kevin: And Jeff, I guess from an employer perspective, this looks like there was some cost shifting on the high-deductible health plan side. Do you think this has an impact on high-deductible health plan participation?
 
Jeff: Oh, without a doubt. I think to Logan's point, if you are both taking the risk and responsibility of an HDHP and then you log into Open Enrollment and see that your HDHP premium has actually gone up a lot, then I can definitely see one more gravitation to PPO and to a lesser percentage of people willing to take that risk.
 
Jen: And I think as people sort of are getting used to consumerism, I think as Jessica just pointed out, you know, there's this idea of one wallet. You know, that's the same money that you have to pay for your rent and your food, and now it's your premium. So it's all of this together that they're trying to navigate and understand. And as, you know, as you just said, you know, if that difference is a lot smaller, it makes it a little more difficult to balance that.
 
Kevin: And Jessica, did you make any significant shifts from a premium perspective this year?
 
Jessica: So we actually made our first increase in premiums for I think five years on the HRA plan and three years on the PPO. So that may seem shocking and you're all like, "Oh, my goodness, they haven't changed their premiums." But there was a big differential. We have about a two times difference between the HRA and the PPO, so it was hard to make those shifts. But we consciously adjusted the high-deductible plan by 3% and the PPO, by 7%, but we were already at 53% of our population signing up for the HRA plan, so we didn't see a huge shift this year. I think there was a lot of inertia within our group. They recognized that difference in premium. But because I think a lot of it has to do with our actual premium design…I'm just getting out a little bit more with the high-deductible plans. I know 10 years ago when we started working on the HRAs and HSAs, we were pricing them for nearly free or $0, right? And so now we're seeing that catching up because the overall cost model within the HRA, they're still having claims. There's still expense associated with those plans, so we may see a little bit of a leveling out in who's enrolling in what plan.
 
Kevin: Okay. Logan, from a HDHP participation level perspective, as Jeff anticipated, we did see a little bit of a decrease in terms of participation. The industry average is somewhere between 26%, 27%, and 28%. It's still significantly higher on the Benefitfocus, platform, but do you think this was influenced by the premium increase that we saw across the platform?
 
Logan: Oh, no doubt. I mean, as Jeff was talking about, like, just, you know, five-point difference is…you know, probably is group of employees who, you know, maybe they were on the fence last year about HDHP or PPO, kind of weighing the pros and cons. They went with the HDHP. You know, maybe they went to the doctor a few more times than they thought they would, had more prescriptions than they thought they would. Maybe they contributed something to their HSA, maybe not. But either way, you know, they had a significant expense when they used healthcare. And then they get to Open Enrollment and they see well, the same plan is now going cost them more before they even use their health care. And, you know, a certain percentage makes sense that it would fall back on PPO or they can kind of rely on that copay.
 
Kevin: And Jeff, you know, from your perspective, do you think this means consumers are becoming more savvy around health care as they navigate the platform? 
 
Jeff: Yeah, I mean, I think it's a couple things. One, definitely in our platform, the ability for consumers to actually view their own claims, their family's claims, looking at the preceding 12 months and then making estimations relative to anticipated utilization in the next 12 months. So perhaps you did see scenarios there where folks are more educated, but at the end of the day, I think if the HDHP premium went up, I just think there's far less risk in people venturing back to a PPO. It's something that they can budget for, and things of that nature.
 
Jen: I think, you know, as experts, we can kind of simplify this. You know, we look at these numbers and it's just a five-point difference, but how much choice goes into that and how much knowledge consumers really have to have. And I think you're right Jeff. You know, I think they're just getting savvier and they're trying to understand their plan fit better and understand how all these extra tax dollars fit into it. So, it's just interesting to see how that turn is going to continue.
 
Kevin: Jeff, do you agree?
 
Jeff: Yeah, I had a scratch. Yes, I do. 
 
Kevin: We looked earlier at two industries in particular where we saw a higher introduction of high-deductible health plans, health care, and retail, and what we found is that in those industries we actually saw a higher adoption of high-deductible health plans this year than we did in in 2016. Jessica, you shared earlier that you introduced a high-deductible health plan in 2011, how has plan participation evolved over time at DSW?
 
Jessica: Sure. So I've been here about three years, so I know more about the last three years than I do the first few, but I do know that we had a relatively slow adoption rate in the first couple of years. By 2014, we were at about 45%, 46%, so we've had about a 7-point swing in the last few years. And a lot of that we really believe firmly is related to the communications we've done to educate our folks, from the Benefitfocus Communications Portal to all the other touch points that we have throughout the year has helped to move that needle and take some of the fear factor out of enrolling in those plans. But it really starts at that initial opportunity to enroll in the plan and having some pieces of information in there. Having the Plan Shopping App being available for folks to help make good choices in that moment has certainly helped our associates make good decisions.
 
Kevin: And should we give Erin Bowns a round of applause for her work on the Communication Portal?
 
Jessica: She's sitting over there.
 
Kevin: Erin will…
 
Jessica: Not there.
 
Kevin: …show you their Communication Portal if you ask nicely. Now, we spend a lot of time talking about high-deductible health plans, let's take a look at what's happening on the PPO side. And, you know, one of the things that we saw is that PPO deductibles continue to march higher. What are the implications here, Logan?
 
Logan: Yes, I mean, it's almost the inverse of what's happening with HDHPs, right? You know, you're in a PPO, you expect to, you know, pay more upfront for less financial responsibility down the road. And, you know, we saw PPO premiums stay about the same, but now the deductibles have gone up by about 10%, so it's kind of that double whammy situation there as well. And, you know, obviously the distinctions between these two plans are definitely still there, but you can see that they're kind of starting to fade a little bit. It kind of indicates to me, and, you know, we've discussed this at Benefitfocus, that, you know, it might suggest that, you know, in a few years, maybe even sooner that, you know, one way or another every plan that's out there is some sort of consumer-directed plan with significant out-of-pocket responsibility on the part of the employee.
 
Kevin: Yep. As Logan points out, the IRS minimum for designation as a high-deductible plan is $2,600. PPOs are very close to that threshold today. Jeff, what are the implications there as you think about, for example, CDH accounts and an HSA account in particular? 
 
Jeff: Yeah, so I'd say a couple of things. One that it's interesting that 24 or 21 number. So those are essentially like four CDHP plans without the benefits of a CDHP. And then two, so, certainly as I guess with this administration, the one thing we've heard consistently is that they are going to drive more flexibility around HSAs and HRAs and things of that nature. So I think you'll see greater utilization there. But also to me, it still just comes back to claims data. I don't know how employees make a PPO versus a CDHP decision if they don't have access to their own claims data. And I don't know how self-insured employees are able to make these kinds of plan design decisions without having their own claims data. To me, it's just like such a fundamental thing. But once they have that then yes, it's going to accelerate consumer-directed plans.
 
Jen: This really brings into focus sort of those lower-income workers and other PPOs. And, you know, Matt pointed out this morning in the keynote that, you know, a lot of people don't even have $1,000 to pay for any expected out-of-pocket cost. And this is more than twice that. So there's just a lot of risk that people even in these traditional plans, who probably think that they're covered still have.
 
Kevin: Now, at the same time we also saw out-of-pocket maximums actually increase pretty significantly. And one of the conversations we had last night, Jessica, you pointed out there's not a huge difference here between the high-deductible health plan and the PPO when it comes to out-of-pocket maximum.
 
Jessica: There's definitely not. I think when you've got a younger worker, a younger worker is most likely going to ignore the out-of-pocket entirely. They're more focused on, "What's coming out of my paycheck and what's happening with my deductible?" But anyone who's a little bit more conscious, either they've been around this block a few times or they have their own health concerns, this really blurs the lines that makes it much harder to make a good decision.
 
Kevin: Now, we've talked a little bit about plan selection, we've talked a little bit about some of the costs that employees are seeing, the next set of questions that that led us to is how are they doing in terms of saving? Are they setting aside enough to prepare themselves and cover some of the cost that they might encounter? We'll start with FSAs. We did see contributions increase for FSAs in 2017. Jen, why do you think we saw an increase this year?
 
Jen: Yeah, so we still have a ton of people in traditional plans. I mean, we saw that just a little while ago. And those FSAs are still a great way to save tax advantage money to pay for those out-of-pocket costs. And as we just saw, the deductibles and out-of-pocket risks are almost as high as the HDHPs. So it's really important for those employees that are in those traditional plans still to have some of that money set aside.
 
Jessica: I'll just add that there's also been the shift to allowing that $500 rollover. And I think this was year 2 and year 3 and more employers are getting on that bandwagon of allowing that $500 rollover. So it takes some of that use-it-or-lose-it fear off the table. And I've also seen a big swing in FSA vendor offerings of integrating your claims data. So you have to submit less receipts so that you don't get your card turned off. I know that's, like, our number one question, "Why is my card not working?" Because you didn't respond to the 16 emails and text messages. So I think making the FSA experience a little more HSA-like encourages people to participate as well.
 
Kevin: I couldn't agree more. I think we've all been at CVS at midnight at the end of the year buying a lot of Tylenol and contact lens solution.
 
Jessica: ACE bandages.
 
Kevin: ACE bandages, exactly. Now, let's take a look at health savings accounts. Shawn shared some data today around millennials, and we'll dig into that in a minute, but one of the things that we saw was HSA contributions, while they have risen year over year, employer contributions actually offset those increases. Logan, what's your take on what's happening here?
 
Logan: Yes, I mean, despite the fact that employers on average contributed less to these accounts this year, you know, the employee contribution rose. And I think that's very encouraging. I think it indicates that employees are by and large becoming more comfortable with these accounts, understanding them a bit more. Employers are, you know, communicating the value of them better. They're learning how to better navigate kind of this new era of healthcare where, you know, they're expected to take on more of the risk.
 
Kevin: Jessica, at DSW, you transitioned away from a health savings account to a HRA, why was that?
 
Jessica: I was very unpopular for a while. I came to DSW and some of the questions we were getting were from terminated associates actually saying, "Hey, I got this card in the mail, what is it for?" And we said, "Well, it's your HSA balance. You have that money for your health care expenses." "Well, really, I didn't know about that. I wasn't using it." And so it prompted us to really do a deep dive into the data and take a look at our savings rate, our contribution rate, and our actual claims. And we saw that the vast majority of our population because again, we have a very young population, were using less than $500 in claims per year, even larger population wasn't using their plan at all. And so this money was just sort of walking out the door. And being in a high-turnover industry like retail, the numbers didn't necessarily make sense.
 
We made the decision for several reasons to move to the HRA. One, it allowed those dollars to stay with DSW, but it also allowed us to reappropriate those funds for several different things. We went back to a copay model, which can be controversial on the prescription plan, but we felt like it was the right thing to do. Those folks that needed the prescriptions kept them out of the hospital. They kept their claims lower. We wanted to make sure that they could actually pay for and afford their prescriptions. And we liked the overall flexibility of the design. Having a $5 copay for telemedicine, having some simplicity helped us communicate our message a little bit more. 
 
We had a very small population. Less than 4% of our population that had contributed significantly to their HSA over time. So those folks were mostly in our office, and we were able to have those conversations. But that moving to the HRA allowed us to fund other benefits for our plan. We started offering health advocacy, infertility benefits and allowed us to really swing the experience back to the associates. So like I said, we probably will take…you know, dip our toes back in the water in the HSA here in the next couple of years, but for the last few years, it's been working really well for us.
 
Kevin: When you do dip your toe back in, what are some of the investments you'd make from a communication perspective to improve.
 
Jessica: So, I think what's interesting about benefits, I think a communications firm said, "Look at your overall benefits spend and then look at how much you spend on your benefits communications." For us, we spend millions and millions of dollars on health care each year and we spend less than a half percent of that budget on communicating those very important benefits. Helping our associates to be better consumers, and helping them to really appreciate and value what's available to them. And so you really have to have that year-round communication plan. 
 
I know I keep going back to that, but Erin, I'm going to call her out again, she maintains the communication calendar, and we hit on multiple topics throughout the year. We use all sorts of communication media, from videos to what's called a mobile wallet card. So it's outside of our firewall but it links to all of our benefits that you can click on. It's got all of our videos, all the phone numbers, all the group numbers. It's a super easy accessible point that we're constantly sending them back to. We're pointing them to very specific communication opportunities. The Benefitfocus platform is branded, dswbenefits.com. We are the DSW Benefits team. That's how all of our emails come out. We have a very targeted brand so that everyone knows it. When you get your Open Enrollment materials, you know it's coming, not just from DSW but from DSW Benefits. So we have that ongoing messaging so that they look for them.
 
And not only do we have that communication plan throughout the year, we're very targeted and specific. So we take a look at, you know, who would be best targeted for an infertility benefit? Who are the tobacco users on our plan? You know, focusing an email communication to those folks to encourage them to use our tobacco cessation programs. Those kinds of things we try to utilize to avoid some of that fatigue, that burnout, that ignoring our messaging since they already get so many emails. But we use texting. I'm sure we use lots of other things, but that's what I can come up with right now.
 
Kevin: Jen, from the perspective of a millennial, what are some of the tactics that work best?
 
Jen: So I'm sure most of you know, but I'm a huge Twitter fan, so social media works great. I'm always on my mobile device, especially that, like, sort of in-context messaging on-the-go would be great from my perspective. And if you want to tweet me I'm @JenSeesData, so.
 
Jeff: Literally. Yeah. I mean, I think this is going to drive a couple of things. One is, you know, for folks that are in traditional plans like HMOs and PPOs, candidly it's easy. It's a copay and, you know, anyone can figure that out. But when you have this gravitation to HSA, HRA or consumer-directed plans, people are going to need a lot more hand-holding. They're going to need to understand or evaluate, "You know, do I really need to go to brick-and-mortar or do I need a telehealth or things of that nature." And I see, like, some friends of ours are here from BookMD, and I think what they do is sort of a combination of a open table and Yelp for physicians to where they're taking claims data, and they're identifying folks in the top five performing physicians and automatically emailing people around, "Hey, you have an HSA, these things are covered. You know, click here to schedule and click here for Uber to pick you up." I really think HSA is going to drive more innovation in technology and in software just because these plans are not easy for people to understand.
 
Kevin: We talked this morning about some of the investments we made in 2012 through 2014 through 2016 in the health savings account experience on the Benefitfocus platform. Matt previewed some of the investments we're making for 2017. Millennials made really significant gains last year in terms of the amount they were saving. Logan, that's pretty encouraging, would you agree?
 
Logan: Absolutely, very encouraging, very exciting. Jen, it looks like they're taking your advice.
 
Jen: Yeah.
 
Logan: You know, that's a significant increase for those, you know, their youngest subset of millennials. And that 20% just tells me that, you know, employers have done a better job reaching out to, you know, what's really the most financially vulnerable, you know, section of their workforce in terms of age. And then you have these employees that are also, you know, battling student loan debt. And just to get them to invest in HSA is like that is…it's very impressive and, you know, it affirms what I've kind of seen over the past couple of years, this observation that millennials are really embracing their retirement more. They're focusing on that a little more. And, you know, while, you know, they may not be using their HSA dollars this year, this tells me that they understand the long-term savings potential of an HSA as a health care in retirement savings vehicle. Those are kind of unknowns at this point…
 
Jen: Super encouraging.
 
Logan: …for when we retire. We have to do what we can now to kind of take care of ourselves.
 
Jen: It's really encouraging. I mean, the retirement industry has been putting out studies for years that have said that millennials are actually pretty risk-averse. I know myself personally I graduated into the housing bubble. I struggled for a long time, was getting layoffs. A lot of my friends did as well. We all kind of started over in our 30s.  I don't really have any confidence that there's going to be money there when I need it most. To have the technology and to enable people to save and protect themselves and their families, this is one of my favorite sides. It's just really encouraging to me.
 
Jeff: Yeah, I think with the shift from defined benefit, defined contribution, we saw it on the retirement side obviously back in the '70s and what have you. And to me, this is probably the most powerful slide in the deck. Imagine if every employer could report back that their 401(k) contributions increased by 20%. Essentially an HSA is a medical equivalent of a 401(k), and so it's great to see that people are actually using the benefit for what it's worth, and of course, also buying down and taking care of other things like student loan debt and what have you. So I just think this is great.
 
Kevin: Now, on the theme of the deductible gap, which we talked a little bit about in keynote this morning, another area where we saw a significant amount of growth was around employer adoption of voluntary benefits. On average, it actually…the adoption of voluntary benefits on the platform increased 31% year over year, but there was a group of employers offering 3 or more voluntary benefits. And that group actually increased 88% year over year. What do you think is driving that shift, Jeff? 
 
Jeff: Well, I think it's a couple of things. One is people are doing the math around, "Okay, my deductible is $5,000 and my employer is contributing $1,000 and I'm contributing $1,000. You know, there's that $3,000 delta there. I think too there's been these benefits around for quite some time, critical illness and accident, and hospital indemnity. They're fine benefits, but they required you to be in a cafeteria and sit next to an insurance agent, and enroll in these benefits, and/or get a call at home. 
 
I think millennials are a great example to where if you can just take these benefits, if you can simplify them, make them intuitive, you can bundle them with medical so that people readily understand, "If I'm going to take more risk on the CDHP, then I'm going to use these products for any kind of catastrophic kind of risk that may be applicable, so that way I don't have to blow through my HSA." I think a lot of employees are getting that. They're definitely understanding benefits like CI and HI and accident and a CDHP plan. Because these employees don't have savings, adequate savings, they've got to have some kind of nest egg through these different coverages.
 
Jen: Yeah, I mean, we talk a lot about, you know, that it's very encouraging that there was an increase in those contributions, but there's still a huge gap…
 
Jeff: Huge.
 
Jen: These offers really allow employees that extra protection that I think is really needed. As, you know, we've seen the math, so.
 
Kevin: Jessica, at DSW, you have an interesting strategy around voluntary benefits. Maybe talk a little bit about what you do for your employees.
 
Jessica: Sure. So we're a little bit behind the curve. We have not launched quite as many voluntary benefits. But one of the benefits that we've taken a different tact on is long-term disability. So DSW offers short-term disability at 100%. Every full-time associate receives it. But that only covers them for 12-weeks. And I've seen story after story where we've had associates who get past that 12 weeks and have nothing. And it is so important for them to have that income protection, to have food on their table, to have a roof over their head. And where they can have one less worry when they're disabled and trying to get back on their feet, we think long-term disability is important.
 
We made the decision in 2015, at the end of 2015, to automatically enroll everyone in long-term disability. So it's a voluntary product. Yeah, I'm seeing some big wide eyes. You automatically enrolled in something that they have to pay for. Yes, we did. For most of our associates, it was less than a cup of gourmet coffee every pay period. And we sold it to a lot of folks like that. "Listen, it doesn't cost you a whole lot to protect your paycheck. You protect your health, you protect for those big things in life related to your medical care, so why not protect your paycheck?" And that seemed to resonate with folks. We have still maintained over…when it was truly voluntary, we were less than 30% enrollment, and still today we have 75% to 80% continuing to enroll. We have quite a bit of turnover within our population, so there's some inertia there where folks are like, "Nope, I'm good." and I get it. I think we're going to be focusing more on helping to educate.
 
The other benefit to that with long-term disability is that when they're paying for it out of their paycheck, they are not having any taxes taken out of their benefit when it occurs. So it's a great kind of win-win for those associates that maybe they don't understand it now, but if it happens later, they'll really appreciate it at the time that they need it most.
 
Kevin: That's a great Segway. We just spent a little bit of time here. Retail employees in general, we actually saw a significant increase in the number of retail employees who embrace voluntary benefits. So to orient you to the slide, in 2016, 78% of employees did not select the voluntary benefit during the Open Enrollment, which means 22% did. In 2017, 39% of employees selected at least 1 voluntary benefit. And there was a group of 11% of retail employees who actually enrolled in 3 voluntary benefits. When you think about these new offerings Jessica, what's the best way to present these to employees?
 
Jessica: I think a lot of what, you know, Jeff talked about earlier about, you know, it used to be pretty high-pressure sales. You had somebody that wanted to come and sit down and have a conversation. You weren't necessarily there with your spouse or your parent or your other partner to have a conversation. Having that opportunity to have it in the enrollment experience, at their pace being able to walk through and have those "in the moment" nuggets of information, "What does this mean to me?" I think is beneficial for folks. It takes out the pressure but educates them in little bite-sized chunks that helps them to make a good decision for their overall paycheck. I also think seeing that shopping cart and seeing how much it's going to cost out of your paycheck is helpful for them because if you see an annual number, it's a little scary, but when you break it down and say, "This is how much is coming out of my paycheck," they tend to be able to accept it more and latch onto these products.
 
Kevin: As you think about your benefit strategy across the next three to… I'm sorry Jeff, did I just talk on top of you?
 
Jeff: I get that a lot.
 
Kevin: It wouldn't be the first time.
 
Jeff: No, that's okay. I'm good.
 
Kevin: Fire away.
 
Jeff: No, I was just thinking, you know, just sort of the analogy of if you have…in the retail in particular obviously these folks aren't paid as well as maybe particularly other industries, but if you have these employees that are electing CDHPs, and again, they're contributing minimally to their HSA or $1,000, and you don't offer these kinds of benefits to protect them against unforeseen illnesses or accidents, it's probably like buying a beach house and buying home insurance but not flood insurance. I mean, you really have to prepare yourself for something catastrophic in a CDHP, which in a PPO you don't even have to think about that much. So I can definitely see this number increasing as HSAs and CDHPs increase as well.
 
Jen: Knowing how many millennials make up retail, you know. And this is, like, this to me is yet another trend that's really interesting. Maybe some risk aversion behavior in adoption of these benefits. But it's really just, you know, like you said, I just can't wait to see what happens. It's going to be interesting to watch.
 
Jessica: I think in that risk aversion space, millennials are also seeing a much larger percentage of parents and grandparents retiring or not being able to retire because they have no income. They don't have that defined benefit plan to fall back on. I think they are kind of swinging the pendulum back and being more cautious, which is a great thing. It helps them to prepare for the future.
 
Kevin: So one last question for Jessica. As do you think about your benefit strategy and your roadmap for the next three to five years, are there emerging voluntary benefits that your team is thinking about?
 
Jessica: We definitely talk a lot now about tuition assistance as our associates want to be developed. They want to continue to develop, so we've got tuition assistance. But we also have those folks that have already spent a tremendous amount on their education, and as Jeff was talking about, have all of those student loans. So I'm really intrigued by some of those products. I think that that is something that we'll be digging into. As you see more of the millennial population being pet parents, I'm not a millennial, but I'm a pet parent, I think pet insurance. So, that's probably one of those smaller benefits that gets asked for an awful lot, so those. We’re planning to do some more surveying of our folks to really understand the things that are most valuable to them so we know what else is to come.
 
Kevin: And Jen, Logan, are there certain ones that appeal to you all?
 
Jen: Well, my husband…
 
Kevin: Not that you're not a millennial, Jeff. But...
 
Jen: Yeah, well, my husband…
 
Jeff: Thanks.
 
Kevin: …you're not. 
 
Kevin: …is a mountain biker, so we definitely have…I had to send him an insurance. I actually bought telehealth for the first time this year, and I've been very pleased with it so far. Again, anything on my mobile device that's really easy, able to pick up and I don't have to be logged into a computer is really awesome to me.
 
Logan: Yeah. I would definitely go with telehealth as well. I haven't tried it out yet, but, yeah, anytime I don't have to drive, I'll do it. As soon as affordable autonomous car comes out, I'm there. I can't stand driving even in Charleston. I grew up just south of Atlanta so, I mean, that was terrible traffic. But just being in the car is not my favorite thing. So, you know, if something is wrong, I can just FaceTime my doctor. I'm all about that.
 
Kevin: Right. Well, guys, so this concludes our guided tour for the day. There are some top takeaways. Employees have more choice in health care benefits today than they have in the past. Participation in those health plans. It fluctuates with both age and wage. Costs are up significantly regardless of health plan. Employees, especially young ones are saving more. Then employers are increasingly embracing voluntary benefits with their employee population.