It's been just a little more than a year since I joined Accolade as chief human resources officer (“CHRO”) — a role that has both challenged and delighted me. Previously, I spent 15 years with Fidelity Investments. During that time, I had a variety of roles, including leading their benefits and associate experience functions. So, I can wholeheartedly share that I understand and can sympathize with the struggles that health and benefits leaders have faced since the start of the pandemic.

Uncertainty and volatility have become the norm — ranging from navigating the great resignation and concerns surrounding inflation to grappling with the talent ecosystem to the challenge of finding and retaining the best employees. At the same time, our employees are looking to us for support and guidance like never before. They're demanding more from us, and rightfully so. In addition, we're operating in a world where we have fewer resources to deliver on those expectations. It's a difficult balancing act, but it's our obligation to find new ways to prioritize the needs of our employees while being mindful of the resources we have available.

As the CHRO, my job is to walk our talk and identify ways to help our own employees live their healthiest lives. Part of that role is promoting equitable access to healthcare. One specific way that Accolade helps to further health equity in our population is by making healthcare coverage more affordable for our lower-wage earners.

With open enrollment season approaching, I’d like to share how you can implement this same strategy at your workplace. I’ll also explain why it could be beneficial to your employees’ and organization’s bottom lines.

How you implement healthcare cost-sharing matters

As human resources leaders, we understand that healthcare costs are a significant expense for both companies and employees — especially for those employees with lower incomes. We're also aware that it’s important to provide equitable access to care and address social determinants of health by reducing the financial strain on our employees. How does a company successfully accomplish that? I’d like to share an approach we implemented just this year to help close gaps in the cost burden between Accolade’s high-and-lower wage earners.

My team, in partnership with our chief financial officer, decided to try an alternative method to employee healthcare cost-sharing during the 2023 open enrollment session to directly address these income disparities. As a first step, our cross-functional team needed to understand the true financial impact that premiums were having on different employees. We stratified our employees by salary ranges and looked at the data. The insight from this exercise was dismaying, but it was also insightful because the disparity in cost burden was unintended.

Our exercise revealed that when you included both payroll premiums (contributions) to enroll in our medical plans plus out-of-pocket costs (i.e., deductibles, coinsurance, copays), some of our lowest-paid employees were spending 30% of their take-home pay on healthcare, while our highest-paid employees were spending less than 3%. Also, we saw that enrollment in our most affordable plan (with a high deductible) was more than 20% lower for our lower-paid employees — even though our open enrollment cost modeling tool would estimate more than $1,000 of annual savings for changing plans. The exercise gave us the validation we needed to know that implementing a new model was the right thing to do.

To support and provide a more equitable healthcare experience for all our employees, our cross-functional team decided to implement a cost-sharing model that aligned more appropriately with employees’ compensation, by adjusting premiums based on the employee’s pay — versus a one-size-fits-all approach. We created three categories based on salary ranges (salary bands) and adjusted premium costs:

• Lower tier: Lowest-paid employees received a reduction in their healthcare premiums.

• Middle tier: These employees did not see a change to their premiums.

• Higher tier: The highest-paid employees received an increase in their healthcare premiums.

Our team determined the adjustments after completing financial modeling — the process to determine the changes across salary bands to balance total premiums. What we found during this stage was that a slight increase in premiums as a percentage of pay for the higher tier enabled a significant decrease in premiums as a percentage of pay for the lowest tier.

We also performed a review of our three medical options to make sure the plan cost sharing (i.e., deductibles, coinsurance, copays, out-of-pocket maximums) were balanced so that our lower-paid employees were not electing an overall more costly plan because the more affordable plan had a much higher out-of-pocket limit.  Prior to this review, our high deductible plan’s OOP max was $1,000 higher than the other options. So, we reduced this as part of the design recommendations.

The final step was to announce the new employee-cost sharing model. While the data showed us that this was the right thing to do, and the financial modeling gave a sense of fairness in the application of tiered contributions, we were apprehensive about how to communicate an increase to employees — who we all know can be vocal about changes that they view as negatively impacting them.

Be transparent to build trust and understanding

Transparency about the decision was crucial to communication with our employees. To make the case for them, we developed a series of personas — fictional employees with names, back stories, healthcare needs and income levels — who represented real situations within our workforce. We also addressed the reality of high-cost claimants, which are not tied to income level.

Next, our human resources team sat down with our higher-paid employees and shared the personas with them. The goal was to illustrate:

• What someone’s life might be like to gain empathy and understanding.

• The difference in the percentage of their take-home pay that would go toward healthcare.

• What it would mean to them to carry less of the burden of cost-sharing.

We wanted our employees to understand the change we were making. It would have been a minimal increase for our higher-paid folks, while on the other hand, it would have a significant, positive impact on their lower-paid peers. We wanted them to know that this change would close a disparity gap for access to the same health coverage.

I expected to receive some complaints which would be typical after an increase in healthcare premiums. To my surprise, however, we didn’t receive any. I attribute this to being transparent with our employees by telling the story behind the decision. Once they understood what they were doing for their colleagues, they got it. They realized they could afford an increase in their healthcare costs. That allowed our lowest-paid employees to have healthcare that is much more affordable.

Build the business case for change

I share how and why we implemented a healthcare cost-sharing model as an example of what is possible. I hope it inspires you to consider a similar approach. If so, I recommend engaging your chief financial officer or finance department as the next step and:

• Make sure you understand the financial impact of your enrollment patterns.

• Work with your finance team to have someone do the financial modeling — it is possible to make it cost-neutral.

• Build the business case for change — and be transparent with your employees.

Together, your cross-functional team could be rolling out a cost-sharing model in time for upcoming open enrollment to promote health equity at your company.

Eliminate barriers to health and enhance the employee experience

A strong link exists between truly comprehending your employees' experiences and delivering exceptional services simultaneously. We often mistakenly believe that we need to conceal the reasons behind these changes. However, when we are transparent, our employees display empathy and support each other.

By thoroughly analyzing your data and understanding your employees' experiences, you can make a positive impact on their lives both inside and outside of work — all without affecting costs. Discover more about how health equity begins in the workplace today.