Employee benefits have a direct and lasting impact on employee well-being. But too many workers misunderstand benefits offerings and feel disappointed in their choices after open enrollment.
Research from financial services firm Equitable found that more than 50% of employees regretted the benefits they selected during last year’s open enrollment. Adverse selections can lead to coverage gaps, financial challenges, and reduced productivity.
Organizational support can ensure that employees understand and stand by their choices. The outcome benefits your workforce and your bottom line.
Optimal benefits selections support employees’ mental, physical, and financial well-being. Their choices have ripple effects on workforce engagement and output.
Let’s look at employees’ top regrets, potential impacts, and solutions to these open enrollment challenges.
Employee regrets
Research from insurance and benefits firm MetLife highlights the need for a better understanding of benefits offerings:
- 60% of employees said they don’t understand their benefits well enough.
- 56% wish they knew how to get more value from their benefits.
A lack of time spent on benefits selections may exacerbate a lack of understanding. Industry news source BenefitsPRO notes that the typical enrollment period lasts two weeks. But employees spend just 30 to 60 minutes selecting their benefits. In contrast, the average individual will spend 28 hours on social media during that same two-week period.
According to Equitable, employees listed the following as their top regrets:
- 25% of employees didn’t adjust their benefits based on life changes.
- 20% missed the deadline to select benefits.
- 19% didn’t understand the offerings in general or the benefits they selected.
Nonprofit HR association WorldatWork notes that younger employees are more likely to regret open enrollment decisions. Disappointment affected 78% of Generation Z employees and 64% of millennials.
Potential impacts
Let’s take a closer look at how these regrets negatively affect employees and employers.
Life changes
Equitable’s research showed that 25% of employees failed to adjust benefits based on life circumstances. New offerings or levels of coverage could support them physically, mentally, and financially through current and future life events.
Life changes take many forms, including marriage, divorce, death, birth, and adoption. They may also look like buying a house, saving for educational expenses, or developing a chronic health condition.
Ideally, employees will adjust their benefits selections to support them through life events. For example, they might add voluntary benefits to cover a new pet or guard against extended hospital stays for a developing illness.
Not acting during open enrollment leaves employees vulnerable to heightened risks and hardships. Inaction doesn’t just affect the personal side. These challenges affect employees’ ability to focus, engage, and perform at work.
Missed deadlines
Equitable notes that one out of five employees missed the enrollment deadline. Some may not have been aware of the deadline, while others forgot.
Many organizations automatically enroll employees in their previous year’s coverage when they don’t act by the deadline. But this passive approach can still be costly. Needs change from year to year, and prior choices may not provide adequate coverage.
It’s even worse when a missed deadline means employees miss out on benefits coverage altogether. Medical expenses can become financially devastating without insurance, and inadequate coverage negatively affects holistic well-being. WorldatWork notes that when employees struggle in any area of individual health, it affects their ability to show up and be productive at work.
Benefits misunderstandings
Research from Equitable and MetLife shows that employees are overwhelmed by the complexity of benefits. This lack of knowledge can lead to ill-fitting choices during open enrollment.
Employees might turn down coverage that is essential for their physical, mental, or financial health. Or they might choose benefits they don’t need or use, unnecessarily reducing their take-home pay.
WorldatWork highlights the real-world impacts on employees, including decreased financial security and the avoidance of care because of cost. For example, workers might select a high-deductible health plan based on lower monthly premiums without realizing that a preferred provider organization plan better suits their health needs. Or they might miss the pretax benefits of a flexible spending account because they don’t understand how it works.
The lack of understanding goes beyond core benefits offerings. Employer association WCI notes that nearly 60% of employees didn’t understand hospital indemnity insurance. But after learning about this common voluntary benefit, 87% said it would be valuable.
Employees who don’t understand the value of benefits will be less satisfied and engaged with offerings that could impact their personal and professional abilities.
Solutions to open enrollment challenges
Your organization plays a vital role in helping employees make the best benefits decisions for their unique circumstances. Addressing these challenges begins before the start of open enrollment.
These four strategies can improve employees’ benefits decision-making:
- Communicate deadlines early and often.
- Prioritize benefits education.
- Use plain language.
- Personalize communication channels.
Communicate deadlines early and often
Employees are juggling personal and professional responsibilities while being bombarded with emails, texts, social media posts, and other communications.
To cut through the noise, consistently and proactively remind employees about open enrollment deadlines. Use multiple communication channels, including:
- Work emails, text messages, and phone calls
- Physical mail sent to employees’ homes
- Infographics and flyers posted in common areas
- Reminders during staff meetings
- Updates via internal communications platforms and messaging apps.
Managers, HR staff, and employee champions can also support word-of-mouth promotion to increase awareness of deadlines.
Prioritize benefits education
Employees need time and resources to learn about diverse benefits offerings. As benefits evolve, they will need access to information and education to become familiar with their options.
Create a hub where employees can access resources, videos, and interactive tools that explain core and voluntary benefits. Consider complementing these tools with live presentations, Q&A sessions, and one-on-one guidance from HR staff and benefits experts.
Examine open enrollment software and AI tools that walk employees through different scenarios. These tools can demonstrate how different benefits selections impact employees’ coverage for changing life circumstances.
Use plain language
HR pros know benefits inside and out. But most employees are unfamiliar with insider terms. Research from Ohio State University found that benefits jargon could even reduce plan participation.
The following tips can make benefits more accessible:
- Use small words and short sentences.
- Keep messages concise.
- Focus on necessary actions.
- Tell employees how they will gain.
- Customize your messaging.
For open enrollment, keep it simple. Highlight deadlines. Repeat them. Explain each benefit. Define key terms that employees might not understand. Send links for more information. Show employees the physical, mental, and financial benefits of open enrollment decisions.
Personalize communication channels
Individuals learn in different ways. For example, generational differences may impact employees’ preferred approach to benefits education.
According to WCI, 53% of employees rely on employer-provided open enrollment to guide their decisions. That figure jumped to 60% for Gen X employees and 67% for baby boomers.
WCI reports that younger generations are more likely to use social media to explore benefits options. While just 24% of employees use social media this way, the numbers increase to 43% for Gen Z employees and 37% for millennials.
In addition, 35% of employees would use a financial professional to help with their benefits decisions.
Building a multichannel communication strategy tailored to employee preferences can boost decision-making. Matching channels like email, social media, video, and in-person discussions to the appropriate audience will enhance your impact. Ensuring broad access to benefits information will inform and prepare employees for open enrollment decisions.
Your benefits adviser can help
Open enrollment is one of the most impactful times of the year for your employees and organization. By improving benefits education, increasing communications, and emphasizing deadlines, you can reduce regret and help employees make confident, informed decisions.
For more information on open enrollment communications and benefits education strategies, talk to your insurance broker or benefits adviser. They can help you assess your current approach, tackle challenges, and implement new solutions.