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Writer's pictureTroy Vermillion

What Healthcare Myths Have You Been Lead to Believe?


What Healthcare Myths Have You Been Lead to Believe?

Let’s face it—navigating employee benefits, onboarding, compliance, and healthcare costs can feel like trying to solve a Rubik's Cube while blindfolded. HR leaders are often bombarded with confusing jargon, sky-high premiums, and the occasional "But this is how it’s always been done" nonsense.


Spoiler alert: It doesn’t have to be that way!


As an employee benefits expert who’s seen it all, I’m here to set the record straight, break down the myths, and help be your catalyst for real change. I believe in promoting transparency and results—not just handing you a one-size-fits-all benefits package with a hefty price tag. My goal? To help you maximize your benefits while minimizing your risk and spending, using the most advanced and cost-effective strategies available.


In this myth vs. truth guide, we’ll tackle the most common areas where misconceptions I hear every single day are wreaking havoc on companies and their employees. And don’t worry, we’ll sprinkle in a little humor along the way (because, let’s be honest, we all need it when talking about health insurance!).


Let’s roll up our sleeves, debunk some myths, and make sure you walk away feeling empowered to leverage your benefits package like never before!


Quick Navigation


Cost of Healthcare and Employee Benefits


Onboarding & Open Enrollment


Compliance


Transparency


Fully Insured vs. Alternative Funding


Healthcare System and Navigating It


1. Cost of Healthcare and Employee Benefits


Myth 1: "Employee benefits always get more expensive, and there’s nothing you can do about it."

Truth: Healthcare costs have risen, but companies can control expenses with self-funded or level-funded plans, potentially saving 10-25% annually. Wellness programs and consumer driven solutions can also drive down costs by promoting healthier lifestyles and choices.


Myth 2: "The only way to reduce benefits costs is by increasing employee premiums or deductibles."

Truth: Besides cost-shifting, options like telemedicine and high-performance networks can manage costs. 60% of employers report lower healthcare costs after implementing wellness programs.


Myth 3: "All benefits brokers offer the same rates, so there’s no room for negotiation."

Truth: Rates can vary, especially with alternative funding models. Employers can negotiate lower premiums with detailed claims data.


Myth 4: "You can’t control pharmacy costs; they’re always going to increase."

Truth: Pharmacy Benefit Managers (PBMs) and specialty drug management programs help businesses manage these costs, reducing pharmacy spend by up to 44%.


Myth 5: "Reducing costs requires cutting essential benefits."

Truth: By offering voluntary benefits (like supplemental insurance or telemedicine), employers can reduce costs without cutting essential coverage, improving employee satisfaction while managing expenses.


Myth 6: "Increasing copays is the most effective way to control costs."

Truth: Raising copays can backfire by reducing healthcare access and increasing long-term costs. Encouraging preventive care and chronic condition management reduces overall healthcare claims.


Myth 7: "Healthcare cost trends are uncontrollable."

Truth: Tools like price transparency platforms and health advocacy services can significantly control costs by guiding employees to lower-cost providers and facilities.


Myth 8: "Health benefits don’t need to be evaluated annually."

Truth: Regular reviews help identify inefficiencies, underutilized services, or new cost-saving opportunities. 47% of companies that reevaluate annually see a reduction in unnecessary costs.


Myth 9: "High-deductible plans always reduce costs."

Truth: While high-deductible plans lower premiums, they can lead to delayed care and increased costs in the long run. Health Savings Accounts (HSAs) and employer contributions to HSAs can soften the impact and improve employee engagement.


2. Onboarding & Open Enrollment


Myth 1: "Onboarding is just about paperwork, and it’s over once the employee starts."

Truth: Onboarding impacts retention and engagement. Structured onboarding programs can increase new hire retention by 69%. Best practices include extending onboarding to cover training and cultural integration.


Myth 2: "Open enrollment only needs to be communicated a couple of weeks beforehand."

Truth: Successful open enrollment requires ongoing communication. 62% of employees want more help understanding their benefits throughout the year, and especially before the enrollment period begins. Start communicating 2-3 months in advance.


Myth 3: "Onboarding can be fully automated with digital tools."

Truth: Digital tools can streamline the process, but human interaction is essential for a smooth onboarding experience. Companies that use a combination of digital tools and HR support see higher employee satisfaction during onboarding.


Myth 4: "Providing the same benefits year after year reduces questions."

Truth: Even if benefits remain unchanged, employees’ personal situations change, and new hires need guidance. 45% of employees modify their benefits year over year.


Myth 5: "Onboarding ends after the first day."

Truth: Onboarding should last at least 90 days, including continued training and mentoring. Companies with extended onboarding have 50% more productive employees.


Myth 6: "Employees will always choose the right benefits for their needs."

Truth: Many employees don’t fully understand their benefits and may select plans that don’t match their needs. 87% of employees are at risk of making poor choices without proper guidance.


Myth 7: "If employees have a benefits portal, they won’t need HR support."

Truth: Even with a self-service portal, 63% of employees still need HR assistance to navigate the complexities of benefits.


Myth 8: "Open enrollment materials don’t need to be customized."

Truth: 58% of employees prefer personalized benefits communication. Tailoring materials to different employee groups (e.g., younger vs. older workers) increases engagement and understanding.


Myth 9: "A single onboarding session is sufficient."

Truth: A one-time onboarding session is rarely enough. Companies that extend onboarding over several months have 82% higher retention rates, according to Glassdoor.


3. Compliance


Myth 1: "Compliance is simple and doesn't change often."

Truth: Compliance is complex and constantly evolving. 70% of businesses fail compliance audits due to outdated or incorrect benefits documentation, resulting in costly fines.


Myth 2: "Small businesses don’t need to worry about compliance."

Truth: Even small businesses are subject to regulations like ACA, COBRA, and HIPAA. Non-compliance can lead to penalties of $2,500 per employee, even for small companies.


Myth 3: "Our benefits provider handles all compliance, so we don’t need to worry."

Truth: While providers help, the ultimate compliance responsibility lies with the employer. In my 15 years in this industry, I've found mistakes and oversights nearly every single time I've looked. Scary stuff! So remember, ensuring the proper documentation, notices, and employee communication is crucial to avoid fines.


Myth 4: "Fines for non-compliance are minor."

Truth: Non-compliance penalties can be severe, particularly under the ACA, where penalties can reach $36,500 annually per compliance failure for reporting errors.


Myth 5: "Only large companies need to comply with ACA reporting."

Truth: ACA reporting requirements apply to companies with 50 or more full-time employees. Even small businesses must comply with other mandates like COBRA and HIPAA.


Myth 6: "Offering benefits exempts us from fines."

Truth: Simply offering benefits is not enough; ensuring those benefits meet regulatory requirements is key. 60% of fines levied are related to non-compliance with benefits documentation and reporting standards.


Myth 7: "Outsourcing benefits compliance means we’re fully protected."

Truth: Outsourcing can help, but the ultimate legal responsibility still rests with the employer. Regularly audit third-party vendors to ensure compliance.


Myth 8: "We only need to focus on federal compliance."

Truth: State-level regulations can vary significantly. 27 states have their own mandates regarding employee benefits, making state-specific compliance just as important as federal regulations.


4. Transparency


Myth 1: "Employees don’t care about the details of their healthcare plans."

Truth: 87% of employees don’t fully understand their benefits. Providing transparency tools helps employees make informed decisions, improving engagement and retention.


Myth 2: "It’s better to stick with one benefits package to avoid confusion."

Truth: Offering multiple plan options increases satisfaction. 76% of employees are more satisfied when they can choose plans that meet their personal and family needs.


Myth 3: "Employees don’t need access to claims data or transparency tools."

Truth: 80% of employees say they are more likely to select healthcare providers based on cost if given access to price transparency tools, according to Alegeus.


Myth 4: "Transparency will overwhelm employees and lead to more questions."

Truth: On the contrary, transparency leads to fewer questions in the long run. In fact, 58% of employees who have access to clear and transparent information about their healthcare costs report feeling more confident in their decision-making, according to a study by WTW.


Myth 5: "Only large companies need to provide cost transparency tools."

Truth: Transparency is valuable for companies of all sizes. Small and mid-sized companies can significantly benefit from transparency tools as they help employees make more cost-conscious decisions, ultimately reducing overall healthcare expenditures.


Myth 6: "Transparency doesn't reduce costs for employers."

Truth: When employees have access to cost data, they are more likely to choose cost-effective providers and services. Employers save an average of 10-15% on healthcare costs when price transparency tools are effectively utilized, according to the Health Care Cost Institute.


Myth 7: "Employees only care about the final premium costs."

Truth: While premiums matter, employees are also concerned about out-of-pocket expenses, network availability, and prescription drug costs. Providing full transparency on all these aspects helps employees make smarter choices.


Myth 8: "Transparency tools are expensive to implement."

Truth: Many transparency tools, especially when integrated with existing benefits platforms, are cost-effective or included. Either way, the savings they generate by guiding employees to more affordable options quickly outweigh the initial investment.


Myth 9: "Employees will be confused by too much information."

Truth: Simplifying information with easy-to-read formats, FAQs, and decision-support tools makes transparency accessible, not confusing. When presented correctly, more information can empower employees, not overwhelm them.


Myth 10: "Offering transparency tools is optional."

Truth: 43 states now have some form of healthcare price transparency law in place, making it increasingly essential for companies to adopt these tools to stay compliant and meet employee expectations.


5. Fully Insured vs. Alternative Funding


Myth 1: "Fully insured plans are the safest option for businesses of all sizes."

Truth: Fully insured plans might be appropriate for some, but self-funded and level-funded plans offer significant savings and flexibility, particularly for businesses with healthier employee populations. 10-20% annual savings are common with alternative funding models.


Myth 2: "Self-funding is too risky for small businesses."

Truth: Level-funded plans and captive plans provide small businesses with a lower-risk option to benefit from self-funding while minimizing financial volatility. 53% of small businesses using level-funded plans report smaller year-over-year increases in costs compared to fully insured plans.


Myth 3: "Alternative funding models are only for large enterprises."

Truth: More small and mid-sized businesses are turning to self-funding or level-funding. 40% of small businesses (with fewer than 200 employees) now use these models, citing cost control and plan flexibility as key reasons.


Myth 4: "Once you’re in a fully insured plan, you can’t switch to self-funding mid-year."

Truth: Switching from fully insured to self-funded plans is possible mid-year in some cases, especially if there are significant changes in claims or workforce demographics. Many companies consider alternative options after a substantial change in claims data.


Myth 5: "The only way to manage costs with fully insured plans is by increasing deductibles and copays."

Truth: Fully insured plans can still be managed effectively through wellness incentives, consumer tools, narrow networks, and telemedicine options. Companies using these strategies see a 6-12% reduction in healthcare costs without passing the burden onto employees.


Myth 6: "Fully insured plans are more predictable in terms of cost."

Truth: While fully insured plans may seem predictable due to fixed premiums, the long-term trend often results in steadily rising costs. With self-funding, businesses gain more control and transparency over claims, enabling them to proactively manage and mitigate risk.


Myth 7: "Employers have little to no control over healthcare costs in fully insured plans."

Truth: Even with fully insured plans, employers can negotiate plan design, such as restricting networks, adding wellness incentives, and monitoring utilization to manage costs more effectively.


Myth 8: "Self-funded plans are only for companies with low claims."

Truth: Self-funded plans, when paired with stop-loss insurance, protect businesses from catastrophic claims. This allows businesses of all sizes to manage risk while reaping the cost-saving benefits of self-insurance.


Myth 9: "Fully insured plans offer better employee satisfaction."

Truth: Self-funded plans often allow for greater customization of benefits, which can lead to higher employee satisfaction by offering tailored healthcare solutions that better fit employee needs.


Myth 10: "The savings from alternative funding models aren’t worth the administrative effort."

Truth: Most third-party administrators (TPAs) now offer comprehensive services that handle most of the administrative work for self-funded plans. Employers using alternative funding often report savings far outweigh the administrative burden, particularly when combined with wellness and transparency initiatives.


The Healthcare System (and How it Profits Off of You)


Myth 1: "Healthcare is designed to help people get better as quickly as possible."

Truth: In reality, the system is often built to manage chronic conditions rather than cure them. The more ongoing treatments and prescriptions, the more profit is made. The U.S. spends over $3.8 trillion on healthcare annually, and chronic diseases account for 90% of that spend.


Myth 2: "Prescription drugs are priced based on their value to patients."

Truth: Drug prices often have little to do with their actual value or effectiveness. In fact, the pricing is driven by profit margins, and specialty drugs can cost tens of thousands per year—whether or not they provide proportionate benefits. Pharmaceutical companies rank among the most profitable industries, thanks to a system that prioritizes profits over patient outcomes.


Myth 3: "Insurance companies work to lower costs for everyone."

Truth: Insurance companies profit from high premiums, co-pays, and deductibles. The more claims they approve the more out-of-pocket costs they shift to patients and businesses each renewal cycle—often at the expense of proper patient care.


Myth 4: "Hospitals charge fairly for the services they provide."

Truth: Hospital pricing can vary wildly depending on the insurance contract, and billed amounts are often inflated. An aspirin that costs pennies in a pharmacy might be billed at $30 in a hospital setting. And let’s not even start on those surprise medical bills for out-of-network services that you never even knew were out-of-network.


Myth 5: "More expensive treatments are always better."

Truth: The cost of a treatment doesn’t necessarily reflect its effectiveness. In fact, many low-cost therapies or preventive measures are often just as effective as their more expensive counterparts, but the system doesn’t prioritize them because they generate less revenue.


Myth 6: "Insurance networks are designed to give you access to the best doctors."

Truth: Networks are often based on financial agreements between insurance companies and providers, not necessarily the quality of care. Being “in-network” often means that the provider agreed to accept lower payments—not that they are the best option for you.


Myth 7: "Everyone has access to the same healthcare quality."

Truth: Healthcare quality can vary drastically depending on your insurance plan, location, and income. Those with better insurance or more financial resources can often access higher-quality care, leaving many people stuck in a cycle of poor care and escalating health problems.


Myth 8: "Preventive care is a priority in the healthcare system."

Truth: While we hear a lot about prevention, the healthcare system makes far more money managing diseases than preventing them. The U.S. spends only 2.5% of its healthcare budget on preventive care, leaving the rest to focus on expensive treatments after problems arise.


Myth 9: "You’ll always know what you’ll pay upfront for healthcare services."

Truth: Good luck with that. Price transparency is still a major issue. Many patients don’t know the cost of a procedure until they’re billed, leading to surprise bills that are far higher than expected.


Conclusion


In summary, debunking the common misconceptions surrounding healthcare costs, onboarding processes, compliance, transparency, and funding models is not just a smart move—it's essential for your business's success. By confronting these myths, you can take control of your expenses, enhance employee engagement, and ensure compliance with ease.


Staying informed and adopting proactive strategies empowers businesses to manage healthcare costs effectively while still offering competitive benefits packages. This approach not only supports employee retention but also fosters satisfaction and loyalty within your workforce.


Embrace these opportunities to reshape your organization's perspective on healthcare and benefits. With the right mindset and tools, you can transform challenges into strengths, creating a thriving environment for both your employees and your bottom line.


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*Looking for ways to improve your benefits strategy? Contact me today.



Troy Vermillion - Author

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