Despite Positive Behavioral Shifts, Education on Health Plan Specifics and Maximization of Benefit Offerings Still Needed

MARLBOROUGH, Mass., September 24, 2003 - As more than 80 million Americans face annual benefits enrollment season,¹ a Fidelity Investments study² released today reveals that many American workers are adjusting benefits behaviors and making healthier lifestyle choices to combat rising medical costs, yet they still need education about their health plan benefits.

The survey revealed that those behavioral changes include more than 80% of respondents choosing or expecting to choose generic drugs when available and 25% decreasing or expecting to decrease their emergency room visits. Additional changes include more than half (58%) of workers leveraging or expecting to leverage the Internet to better understand medical conditions and diagnoses, and 57% reviewing or expecting to review treatment options and costs more carefully with their doctors.

In addition to the rise in changing behaviors, the lifestyle changes that many employees are trying to make to reduce their need for health care or control health care costs include improving their diets (47%), undergoing routine screening tests (37%), losing weight (34%) and exercising regularly (30%).

Better Education about Health Plan Can Lead to Improved Benefits Management

"With health care benefits becoming increasingly expensive, employees must understand their health plans and assess their families' medical needs when determining which plan to enroll in for the coming year," said Sarah Donnelly, vice president, Fidelity Employer Services Company. "Our research indicates that while nearly every worker considers health care as one of their most important benefits, they may not use all of the planning tools and other benefit information available from their employers to make careful decisions that maximize their health benefits."

Four out of five (80%) workers surveyed report they have as much information as they need to understand their health plans. However, some are less certain with their plans' specifics and may benefit from additional education. Key knowledge gaps include the differences between indemnity plans, PPOs, and HMOs (42% do not fully understand them); the difference in services covered by the health plans available (34%); and differences in co-pays, deductibles or co-insurance (32%) for medical plans offered by their employers. Many surveyed are also less certain about prescription drug coverage/costs (49%), and less certain about what changes they can make any time during the year (39%) or only during open enrollment (24%). Seventy percent did not fully understand how to file an appeal for a denied claim.

In addition to plan specifics, Fidelity found that very few employees (23%) are aware of health promotion or wellness programs - offered by the vast majority of health plans . Subsequently, most are not taking advantage of these programs, despite making lifestyle changes, such as losing weight, for which they may have health plan benefits.

"Even if employees choose to remain enrolled in the same plan for the year ahead, annual enrollment is the ideal time to learn about plan details so that they can maximize their health care benefits," said Donnelly. "Our study found that online tools are valued by employees in choosing a plan. By using such tools to compare the details of health plans, workers can be better informed when using their selected health plan during the year."

Families Underutilizing Flexible Spending Accounts (FSAs)

Although families with dependent children may use frequent medical care for well-child visits and recurrent, acute illnesses such as ear infections,⁴ only one-third are enrolled in the health care FSAs available to them. More than half (52%) said that they did not participate in a tax-favored FSA because of the risk of losing unspent savings. One in four (24%) indicate they have eligible expenses, but that saving receipts and getting reimbursed require too much effort.

"Health care FSAs are an important tool in helping employees address increasing out-of-pocket health care costs. Increasingly, employers are providing calculators to help employees better estimate their FSA contribution based on their plan's deductibles and co-pays and on the employee's expected usage of medical services," said Donnelly. "And, the introduction of debit cards and broadened reimbursement eligibility for non-prescription drugs make FSAs more convenient and attractive than ever before."

Fidelity Workplace Services

Through its Workplace Services offering, Fidelity Investments provides human resources administration and employee benefits solutions to more than 16 million participants in more than 11,600 retirement, pension, health and welfare, payroll and stock plans as of August 31, 2003.

Fidelity Investments

Fidelity Investments is one of the world's largest providers of financial services, with custodied assets of $1.6 trillion, including managed assets of $906.0 billion as of August 31, 2003. Fidelity offers investment management, retirement planning, brokerage, human resources and benefits outsourcing services to 18 million individuals and institutions as well as through 5,500 financial intermediaries. The firm is the largest mutual fund company in the United States, the No. 1 provider of workplace retirement savings plans, one of the largest mutual fund supermarkets and a leading online brokerage firm. For more information about Fidelity Investments, visit http://www.fidelity.com/

¹ Fidelity Investments and EBRI, December 2002 Issue Brief
² A nationwide online survey conducted by Richard Day Research, Inc. using Harris Interactive's online panel from July 30-August 28, 2003 among 1,775 employees at large employers (5,000 or more employees) who participate in at least one of the following workplace benefits: health care plan, defined contribution plan, defined benefit plan and/or medical flexible spending account (enrolled or available).
³ American Association of Health Plans, 2001
⁴ American Academy of Family Physicians, 2000 data

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Fidelity Employer Services Company, a division of Fidelity Investments
Institutional Services Company, Inc.,
82 Devonshire Street, Boston, MA 02109.