Employee Benefits

5 Reasons Why Employees are Confused About Benefits

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Employers provide a variety of benefit choices to complement their employees’ salaries. And while employees value their plans, at least 50% admit they don’t understand their coverage. Here are five reasons why employees are confused about benefits, along with three tips on what employers can do.

Preoccupied

Employees have many responsibilities at work and home. Often, they are preoccupied, thinking about how to pay their bills and many other concerns. They have little time to think about their benefits, which can cause confusion when they need to use their coverage.

Workers who have health needs and use their benefits tend to understand their coverage. But many employees rarely use their plans, including the preventive care benefits covered by insurance. Although these employees don’t think a lot about their benefits, they want to know they have excellent coverage if they need it.

Overwhelmed

Many employees today are overwhelmed and stressed. They have difficulty making decisions about their health and benefits. However, due to the pandemic, employees have a new appreciation for the security their benefits provide. They feel confident that they’ll be able to handle unexpected health needs.

Historically, insurance benefits were simple in design with set coverage amounts. As competition for talented employees increased, employers sought to provide flexible plans with more coverage options.

Employees do want more benefits choices, but not too many. Some employers offer over 10 different benefits options, which workers may find overwhelming. Employees also may struggle to understand their benefits because the plan descriptions use unfamiliar insurance terms.

Confused

Studies show that more than 80% of employees are confused about their benefits. The youngest group of workers, Generation Z, are reviewing benefits information for the first time and are puzzled about the plan choices and coverage options.

Most benefit plans have online websites and smartphone apps that employees are encouraged to use. Younger employees gravitate toward using the latest technology, but older employees may not. After trying to figure out these tools, some employees may give up and contact HR for assistance. Or, they may ask coworkers or friends for help.

Uninformed

For many employers, benefits account for about 30% of their budget for employee benefits. But often, employees are not aware of the value of their benefits. When reviewing annual benefits options, employees tend to rush through the enrollment process.

Research shows that about 73% of employees spend less than an hour, and 41% spend less than 30 minutes evaluating plan information. Often employees choose the same plans and coverage levels year after year. They don’t take the time to explore new or updated benefits that may better fit their needs and those of their dependents.

Stressed

Most Americans feel stressed. Due to COVID-19, workplace stress has become commonplace. Research shows that 48% of employees experienced high to extreme stress during the pandemic, an increase of 7% over the last two years.

Many employees also worry about finances. They may have lost income during the pandemic and believe it could take years to rebuild their savings. About 4 in 5 employees report living paycheck to paycheck. Nearly 41% say they struggle to pay monthly bills. In addition, approximately 37% of employees and/or their spouses have student loan debts.

Because of these issues, employees may be hesitant to spend money on benefits. Studies show workers are willing to invest in medical, dental and vision insurance. But for other voluntary coverage, they may select less expensive options.

3 Ways Employers Can Help

Employees tend to expect their employers to help them understand their benefits. And while workers want this information, employers must develop a strategy to get employees’ attention. Businesses must do more than send out packets and email reminders. Consider three ideas to improve benefits communication, avoid employee confusion and increase participation.

Tailor messages

Most employers have four (sometimes five) demographic groups or generations of employees working at their businesses. Each generation has different benefits needs. Employers who provide the one-size-fits-all benefits information miss reaching their employees. It explains why 80% of employers say their employees don’t open or read their benefits information.

To reach employees, employers need to tailor messages to each group. The communication strategy doesn’t have to be complicated. However, employers need to identify the benefits that are significant to each group of employees. Then customize communications to catch their attention. Learn more tips for selecting and communicating employee benefits.

Communicate clearly

Review current benefits communication information to ensure the information is clear and easy to understand. Ask other employees to read the descriptions to identify confusing terms. Include charts, graphs and examples to explain benefits and educate employees on how to use them.

If possible, provide short stories of how benefits have helped other workers. When a new benefit is offered, such as telemedicine, explain the value and how employees can use it to support their health.

Survey employees

Surveying employees is an excellent way to gather feedback. They allow employees the opportunity to voice their opinions and any confusion about benefits. Conduct pulse surveys as issues arise and regularly ask for input on benefits during the year.

As companies switch to hybrid work schedules, employers need to be aware of workers’ concerns and provide the right plans and perks to keep them engaged. After each survey, follow up with employees to say thanks and tell them how their responses will be used.

Sources:
Best Money Moves
Forbes
– Only Half Of Employees Understand Their Benefits
Forbes – Why Employees Don’t Utilize Company Benefits
BenefitsPro
CareerBuilder
CNBC
LinkedIn