Open enrollment: Help employees compare total health plan costs

Open enrollment asks employees to make one of the most consequential financial decisions of the work year: choosing health insurance. Many compare premiums and pick the option that looks least expensive.

But premiums tell only part of the cost story. A few practical tools, timely reminders and plain-language resources can help employees compare health plan options with more confidence.

A low monthly premium does not always mean lower total healthcare costs at the end of the year. Deductibles, out-of-pocket maximums, provider networks, prescription drug coverage and expected care needs shape what employees actually spend.

When benefits information is easy to understand, employees can choose coverage that fits their lives, avoid costly surprises and see more value in the benefits you provide.

Why health insurance choices can feel hard

Health insurance can confuse even employees who use their coverage regularly. The terms are familiar, but the financial impact may not be clear until someone needs care.

A 2024 study found most privately insured adults understood premiums and deductibles, but many did not understand prescription drug copays or out-of-pocket maximums. Only about one in four enrollees correctly understood that prescription copays can vary by medication type.

Likewise, a KFF survey found 30% of insured adults said it was somewhat or very difficult to understand how much they would pay out of pocket when receiving healthcare services. Among people with employer-sponsored coverage, that number increased to 34%.

That confusion matters during open enrollment, when employees weigh costs, family needs, prescriptions, preferred doctors and household budgets alongside daily responsibilities.

How health plan costs add up

Employees naturally notice the monthly premium first because it is clear, predictable and easy to compare. A plan’s true cost depends on much more than the amount deducted from a paycheck.

A lower-premium health plan may include:

• A higher deductible
• Higher out-of-pocket costs when care is needed
• Different provider network access
• Different prescription drug coverage

For someone who rarely sees a doctor, that tradeoff may make sense. For someone who manages a chronic condition, takes pricy maintenance medications, covers children or expects surgery, the lowest-premium plan could cost more over the year.

The right health plan depends on expected healthcare use, not just what comes out of a paycheck each month.

Coverage questions worth asking

Employers can help employees compare the full picture before choosing a plan.

The Employee Benefit Research Institute found consumers rated several plan features as important, including provider network, low out-of-pocket costs, low premiums, prescription drug coverage and simple-to-understand information.

Before enrollment, employees should ask practical questions such as:

• Do my preferred doctors and facilities participate in the plan’s network?
• Do I or my family members take ongoing prescription medications?
• How much healthcare did we use last year?
• Do we anticipate major healthcare needs in the coming year?
• How much could we realistically afford if unexpected medical expenses arise?

These questions help employees move from “Which plan looks cheapest?” to “Which plan fits how I actually use healthcare?”

Clearer guidance helps employees choose with confidence

Most employers invest heavily in health benefits, but employees may still struggle to connect plan details with their own healthcare needs, budgets and family situations. Clear, timely guidance helps employees look beyond the monthly premium and understand how each plan may work for them throughout the year, offering helpful reminders and general best practices. The most helpful communications often point employees to the right resources at the right time and give them simple steps to evaluate their choices before enrollment decisions are due:

• Review their family’s expected healthcare needs, including regular appointments, prescriptions or planned procedures
• Compare the total cost of each option, not just the monthly premium
• Check provider networks and prescription drug coverage before making a selection
• Use plain-language resources, FAQs and plan comparison tools from your benefits partner
• Ask questions early, before the enrollment deadline approaches

The goal is not to push employees toward one plan or create more work for your human resources team. It is to make the decision feel more manageable by helping employees understand what matters most for their health, family and financial needs. Your benefits partner can support that effort with shareable resources, such as Arkansas Blue Cross and Blue Shield’s Guide to Understanding Health Insurance or free, downloadable flyers and communications through the Employer Toolkit.

Better health plan value starts with better communication

Your employees may choose a health plan only once a year, but that decision can affect nearly every healthcare interaction that follows.

When employees understand how premiums, deductibles, provider networks, prescription drug coverage and out-of-pocket costs work together, they can make more confident open enrollment decisions and face fewer surprises later.

Clearer benefits communication can reduce enrollment frustration, support smarter healthcare decisions and help employees see the value of one of your organization’s most important investments. With simple, human guidance before and during open enrollment, you can help employees choose the right health plan and feel better prepared when they need care.