Benefits Equity: Why Plan Design Choices Hurt Some Groups More

Most employers care deeply about equity. They invest in DEI programs, review pay structures, and strive to create inclusive workplaces.

But there’s a hidden equity issue many organizations miss: their own health plan design.

Even well-structured benefits can unintentionally disadvantage women, older employees, and lower earners. And the result is employees carrying disproportionate financial burdens simply because of how options are presented.

The Hidden Problem: Dominated Plan Options

Sometimes, employers offer multiple plans — but one is objectively worse in every scenario. These are known as dominated plans.

Employees enrolled in dominated options end up paying more no matter what care they use. The kicker? Vulnerable groups are most likely to end up in these plans.

• Women often face higher routine healthcare usage, making them more sensitive to poor plan fit.
• Older employees are more likely to stick with the plan they know, even if it no longer serves them.
• Lower earners may default to the cheapest premium, even when it leads to higher long-term costs.

The result? A benefits design that unintentionally widens financial inequity.

Why This Matters for Employers

When certain groups consistently lose out on plan value:

• Equity goals suffer. Benefits become a source of disparity, not inclusion.
• Trust declines. Employees question whether leadership really has their back.
• Costs rise. Employees in poor-fit plans often make higher-cost care decisions.

Benefits equity isn’t just a social responsibility issue. It’s a financial and cultural one.

A Smarter Approach to Benefits Equity

Forward-thinking employers are rethinking benefits equity, focusing on:

1. Auditing Plan Designs

• Identify if any plan is financially worse across all scenarios.
• Remove dominated plans from the lineup.

2. Personalizing Guidance

• Provide plan recommendations based on real claims data.
• Tailor communications by life stage and healthcare usage patterns.

3. Measuring Impact

• Track adoption rates by demographic.
• Monitor whether groups are disproportionately choosing poor-fit plans.

How Budgie Supports Equity

Budgie Health helps employers close the equity gap in benefits:

• Analytics: reveal when dominated plans exist.
• Claims-backed decision support: guides employees toward plans that fit their needs.
• Personalized nudges: ensure employees understand and use benefits equitably.
• Dashboards: highlight disparities so HR can intervene early.

Instead of perpetuating inequity, benefits become a lever for fairness and financial wellbeing.

The Takeaway

Equity isn’t just about paychecks. It’s about making sure every employee has an equal chance to maximize the value of their benefits.

Plan design matters. Guidance matters. Data matters.

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