Employee Health Insurance Decisions In a Flexible Benefits Environment
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Abstract
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' 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' age, gender, salary, and marital status. The results are considered within an expected utility maximization model.