We’ve all heard the statistics: Unemployment in the U.S. is at its lowest in 50 years, and the economy is considered at full employment. As HR professionals, we know this is a great thing for American workers, and it also requires companies to stay competitive when hiring and retaining employees. It’s clear that employer-sponsored benefits play a crucial role in maintaining that competitiveness in the war for talent — in one 2018 survey, 80% of workers said they would keep a job with benefits rather than take a new job with higher pay but no benefits, and in another, over 70% of companies said retention was a reason for increasing their benefits offering.
Yet despite the importance of benefits for recruitment and retention, employees are still struggling to understand how benefits factor into their overall compensation. At my company, we recently analyzed data from annual enrollment (AE) and found that less than 20% of employees consider themselves a “pro” with their benefits. Another recent survey by Maestro Health of 1,000 workers found that only 33% understand the health insurance offerings from their employer.
Additionally, people are risk-averse when it comes to benefits, which means that when employees don’t fully understand risks and tradeoffs, they may seek what they perceive to be the safest option for benefits. However, that can result in higher plan costs and overinsurance — for example, when employees choose a PPO over an HDHP without weighing the costs.
Employers Can Fill The Void
That’s where employers come in. By increasing benefits literacy through sound strategies, employers can improve their employees’ engagement with benefits and their overall financial well-being as they make informed decisions and maximize resources. Whether they direct dollars toward regular expenses or long-term savings goals, employees who get the best value for their benefits are better placed on the path to financial wellness. And it all starts with truly understanding what their benefits are and how benefits are part of their total compensation. Here’s how HR can drive an improved literacy process.
Speak To The Whole Workforce
Gone are the days when a booklet on health insurance sufficed for benefits communication. Our ways of communicating have changed, and our workforce has diversified, with four generations actively working and a fifth engaged through pensions and benefits.
To meet the needs of today’s workforce, employers must communicate in different formats. For example, online tools are indispensable, but they should be varied. Some people want detailed information, while others prefer a quick text or bite-size information. AI-powered tools are becoming a standard part of the benefits enrollment and ongoing service toolbox, and with good reason: They offer just-in-time support whenever employees need it, which is incredibly valuable in our always-on culture.
Also, consider potential hidden messaging in your communications. Doing 401(k) education? Remember to include imagery of younger employees, not just older couples enjoying retirement. Always avoid jargon to make your materials easy for everyone to understand. When employees see themselves in benefits communications, it helps them understand that we all use our benefits year-round and that benefits matter for them at every life stage.
And don’t forget the importance of face-to-face communication, often the most empathetic form of communicating. Seize the opportunity to connect with employees in person. That could mean health fairs where benefits experts can discuss topics like immediate care versus emergency care, what counts as “preventive” care and more. Financial advisors can also help employees see and understand their broader financial picture and discuss retirement savings goals one-on-one.
Act As A Guide
Decision-support tools are common for benefits selection, but for true benefits literacy, employees need more than support. They need guidance that considers their overall well-being, including physical health, mental health and finances. Just as benefits communication must be accessible and understandable, so too should the tools for benefits selection help guide employees as they move through the decision-making process.
Utilize tools and platforms that inform and educate employees as they’re choosing benefits. For example, decision guidance can mean interactive questions about employees’ needs as they’re making selections, and it can offer definitions of terms and comparisons of different benefits options. These types of tools ensure that information is on hand when employees need it most. No one wants to stop halfway through enrollment to look up acronyms or benefits terminology, so make sure your technology means they won’t need to.
Keep The Conversation Going
The key to improving benefits literacy is to keep talking about benefits outside of AE. We use our benefits all year long, so communicating about them for a few weeks once a year won’t help employees maximize their benefits or their dollars.
Once AE is over, assess how it went, and determine key takeaways for continual improvement. Surveying employees regularly is a helpful way to craft communications and benefits offerings. Ask not only what benefits they’re interested in, but also make it conversational by inquiring how they’re feeling about their finances, or what’s keeping them up at night. Then, leverage this data to inform communications, and refine your benefits offering to ensure the available options are those your employees need. Keeping employees engaged with their benefits all year will increase their understanding and thus improve benefits literacy overall.
Knowledge Is Power
With a tight labor market and continually rising healthcare costs, benefits will remain a critical part of recruitment and retention, as well as employee health and productivity. Take the necessary steps with your communications, your technology and your benefits offering to address the benefits literacy crisis. That way, your organization can make benefits selection a rational process that supports employees’ total well-being, rather than an emotional one based on risk aversion or lack of benefits education.
