Employee Health Insurance Decisions In a Flexible Benefits Environment

Empirical investigations of flexible benefits plans, an increasingly popular type of plan that allows employees to choose among multiple benefits options, have been limited. This study investigates hypotheses relating to the determinants of employees\u27 choices among six different health insurance options under a flexible benefits plan. Using employee-specific selection and demographic data provided by a large firm, we estimate a logistic regression model to analyze the effects of employee and plan characteristics on choice of health care plan. Results suggest that health plan decisions are significantly influenced by option premium, deductible and coinsurance amounts, and by employees\u27 age, gender, salary, and marital status. The results are considered within an expected utility maximization model

Predicting Employee Health Care Decisions in a Flexible Benefits Environment

[Excerpt] The purpose of this study is to identify the determinants of employees\u27 health care selections in a flexible benefits environment. The goal is to develop a model which will enable managers to predict the health care selections of employees. The research tasks required to accomplish this goal are extensive, and are in progress. The following report will summarize the results of analyses completed to date, the analyses that are in progress, the data required to complete these analyses, and the outcomes that can be expected when the study is done

A Theoretical Exploration of Firms\u27 Decisions About Flexible Benefits Plans

The purpose of this paper is to examine the implications of current theories for organizations\u27 decisions about employee benefits, an area that has traditionally received little attention from researchers in the field of human resource management. Drawing on organizational and economic theories, we offer alternative explanations for observed patterns in the adoption and design of flexible benefits plans. By critically analyzing current theories in the context of flexible benefits plans, we hope to gain insights not only into the factors that may determine organizations\u27 benefits decisions, but also into the strengths and weaknesses of the theories themselves. We find that the conflicts, overlaps and limitations inherent in the theories as applied to benefits issues are substantial. The implications for future research are discussed

The Diffusion of Human Resource Innovations: The Case of Flexible Benefits Plans

The purpose of this paper is to examine the implications of current theories for organizations\u27 decisions about employee benefits. Drawing on organizational and economic theories, we offer alternative explanations for patterns in the adoption and design of flexible benefits plans. An integrated model of firms\u27 flex plan decisions is presented

The Effects of a Flexible Benefits Expert System on Employee Decisions and Satisfaction

Anecdotal reports and recent reviews assert that expert systems are potentially useful decision aids in human resource management. This study examines the effects of an expert system designed to aid employees when they make their choices in a flexible bellcfit program. A four group quasi-field experimental design is used to examine the relative effects of the expert system compared to a conventional spreadsheet decision aid. Eighty employees at an NCR-AT&T facility were randomly selected and assigned to the groups. Employees using the expert system expressed greater benefits satisfaction compared to those using the spreadsheet aid. The spreadsheet did not have any effect on employees\u27 decisions. When the benefit choices recommended by the expert system differed from the employees\u27 current choices, employees are more likely to change their choices. Consequently, the expert system is likely to affect employees\u27 decisions. Implications are discussed and future research needs are suggested

Validation of Expert Systems: Personal Choice Expert -- A Flexible Employee Benefit System

A method for validating expert systems, based on psychological validation literature and Turing\u27s imitation game, is applied to a flexible benefits expert system. Expert system validation entails determining if a difference exists between expert and novice decisions (construct validity), if the system uses the same inputs and processes to make its decisions as experts (content validity), and if the system produces the same results as experts (criterionrelated validity). If these criteria are satisfied, then the system is indistinguishable from experts for its domain and satisfies Turing\u27s imitation game. The methods developed in this paper are applied to a human resource expert system, Personal Choice Expert (PCE), designed to help employees choose a benefits package in a flexible benefits system. Expert and novice recommendations are compared to those generated by PCE. PCE\u27s recommendations do not significantly differ from those given by experts. High inter-expert agreement exists for some benefit recommendations (e.g. Dental Care and Long-Term Disability) but not for others (e.g. Short-Term Disability and Life Insurance). Insights offered by this method are illustrated and examined

Out-of-Pocket Costs and the Flexible Benefits Decision: Do Employees Make Effective Health Care Choices?

This study analyzes employees\u27 ability to select health insurance benefits that fit their needs.The study analyzes both the actual choices and the implications of those choices for employees, measured as out-of-pocket costs (OPC). By introducing OPC as a measure of decision quality, this study demonstrates its advantages over measuring only employee choice. Results from a sample of manufacturing employees suggest that most employees made cost-optimizing decisions, out-performing recommendations from a linear model. Employees also were financially better off overall with choice than they would have been had they all been placed into either medical plan option available to them. This study supports the value of choice, but does not support the assertion that employees always make benefits decisions that best fit their needs

Unbundling Employment Flexible Benefits for the Gig Economy

Federal labor law requires employers to give employees a rigid bundle of benefits, including the right to unionize, unemployment insurance, worker’s compensation insurance, health insurance, family medical leave, and more. These benefits are not free—benefits cost about one-third of wages—and someone must pay for them. Which of these benefits are worth their cost? This Article takes a theoretical approach to that problem and proposes a flexible benefits solution. Labor law developed under a traditional model of work: long-term employees depended on a single employer to engage in goods-producing work. Few people work that way today. Instead, modern workers are increasingly using multiple technology platforms (such as Uber, Lyft, TaskRabbit, Amazon Flex, DoorDash, Handy, Moonlighting, FLEXABLE, PeoplePerHour, Rover, Snagajob, TaskEasy, Upwork, and many more) to provide short-term service-producing work. Labor laws are a bad fit for this “gig economy.” New legal paradigms are needed. The rigid labor law classification of all workers as either “employees” (who get the entire bundle of benefits) or “independent contractors” (who get none) has led to many lawsuits attempting to redefine who is an “employee” in the gig economy. This issue grows larger as more than one-fifth of the workforce is now categorized as an independent contractor. Ironically, the requirement to provide a rigid bundle of benefits to employees has resulted in fewer workers receiving any benefits at all. This Article argues for unbundling employment benefits so workers in the gig economy can obtain a more optimal mix of benefits and wages. This Article also provides a framework for a more flexible system of employee benefits. It thus makes three contributions. First, this Article demonstrates how a rigid requirement of employment benefits can harm workers. Second, it shows how labor law should incorporate advances in economic theory that it has heretofore generally ignored. Third, this Article presents a flexible framework to solve the refractory problem of rigid worker categorization

The Reallocation of Compensation in Response to Health Insurance Premium Increases

This paper examines how compensation packages change when health insurance premiums rise. We use data on employee choices within a single large firm with a flexible benefits plan; an increasingly common arrangement among medium and large firms. In these companies, employees explicitly choose how to allocate compensation between cash and various benefits such as retirement, medical insurance, life insurance, and dental benefits. We find that a $1 increase in the price of health insurance leads to 52-cent increase in expenditures on health insurance. Approximately 2/3 of this increase is financed through reduced wages and 1/3 through other benefits

A Theoretical Exploration of the Adoption and Design of Flexible Benefit Plans: A Case of Human Resource Innovation

This article explores theoretical explanations of managers\u27 decisions about flexible benefit plans. We (1) examine the adoption and design of flexible benefit plans through four theoretic lenses: institutional, resource dependence, agency, and transaction costs; (2) integrate the relevant insights gained from these theories into a more complete model and derive propositions for future research; and (3) generalize the insights gained from exploring a specific innovation to broader questions surrounding decisions about other human resource innovations