For years, employers have focused on the cost of employee benefits.
Premiums. Renewals. Medical trend. Pharmacy costs. Participation.
But I believe there is another number employers should be measuring:
How much benefit value is available to employees but never actually reaches them?
I call it Employee Benefit Value Leakage.
Recently, a close friend went to fill a 30-day prescription for generic dexlansoprazole, 60 mg. Her cost at the pharmacy was $80.01.
Can she afford $80.01? Yes.
That’s not the point.
After speaking with her physician, she redirected her prescriptions to another pharmacy. My friend was told that, based on her income, she did not qualify for the $0 rate—but her prescriptions could be $15 each.
Same patient.
Same prescription.
Same dosage.
A dramatically different economic outcome.
My immediate thought wasn’t about the $65 she could save.
I thought about the employee making $25,000 a year who hears “$80.01” at the pharmacy counter and says:
“I’ll come back later.”
What happens if they never do it?
That experience reminded me of an analysis I conducted involving more than 1.175 million insurance policies.
In that analysis, approximately $62.27 million in wellness benefits were available.
Only about $10.49 million was paid.
The benefits existed.
The employees had coverage.
The money was available.
But much of the value never reached the people the benefits were designed to serve.
That is value leakage.
And I believe employers may have a much larger problem than they realize.
Employee Benefit Value Leakage is the measurable difference between the benefit value available to an employee and the value the employee receives.
It can occur when:
• An employee doesn’t know or remember a wellness benefit exists.
• A covered claim is never filed.
• A prescription isn’t filled because the employee believes the price is unaffordable.
• A lower-cost pharmacy or care channel exists but is never presented.
• Employees pay for overlapping benefits they don’t understand.
• Administrative friction causes an employee to give up.
The system may technically be working exactly as designed.
The policy is active.
The pharmacy benefit is available.
The claim process exists.
The employee paid the premium.
But the employee never receives the economic value.
For employers, particularly CFOs and CHROs, I believe we need to start asking different questions.
Not simply:
“How much are we spending on employee benefits?”
But:
“For every $100 our company and employees put into the benefit ecosystem, how much measurable value actually reaches our workforce?”
Artificial intelligence now gives us the ability to examine millions of transactions, claims, prescriptions and benefit interactions at a level humans could never practically review one at a time.
We can identify patterns.
We can identify missed claims.
We can identify avoidable costs.
We can identify where a lower-cost path existed but was never presented to the employee.
Most importantly, we can begin to quantify the leakage.
I have spent much of my career studying insurance economics, distribution and profitability.
The more I look at this issue, the more convinced I become that employers are measuring what they spend—but may not be measuring what their employees receive.
Employee Benefit Value Leakage may be one of the highest unmeasured costs in corporate America.
And the employee who can least afford the leakage may be the person paying the highest price for it.
I look forward to your feedback.
Jeff Hyman | jeffhyman.net
Four decades in insurance distribution, M&A, and retention strategy — GE, Aflac, Willis Towers Watson, private practice
