Confusion and risk-aversion driving poor benefit choices
We already knew employees don't understand their benefits, but they also appear to have some misconceptions about their needs.
More than a few workers are “outright confused” about their employer’s benefit offerings and many are risk-adverse—the combination of which can cause workers to be unnecessarily over-insured, according to Benefitsolver’s MyChoice Recommendation Engine Benefits Insights Report.
A full 30 percent of workers say they are outright confused when trying to select benefit offers, according to the report. The data is drawn from questions that a half-million employees answered via Benefitsolver’s MyChoice Recommendation Engine to obtain a personalized benefits recommendation during the 2019 annual enrollment period on the Benefitsolver platform.
Related: 7 steps to helping employees become more active in their health care benefits
“When employees don’t understand benefits, they can’t fully appreciate them, which represents a return-on-investment shortfall for employers, especially when benefits can account for a sizeable chunk of compensation costs,” the authors write.
Exacerbating this is the finding that a majority of workers view their “risk tendencies” to be that of a more risk-adverse “lounger” (28 percent) or “golfer” (37 percent), as opposed to a more risk-taker rock climber (3 percent). A third (32 percent) see themselves about in the middle of the spectrum, having the risk tendencies of a “bicyclist.”
“In addition to lack of knowledge, risk aversion can factor significantly into a person’s benefits choices, especially without appropriate decision support,” the authors write. “Some employees may prefer the perceived predictability of a higher-cost PPO rather than an HDHP with a lower upfront premium contribution, even when the numbers don’t add up.”
To mitigate these issues, employers should not wait until the enrollment period to inundate workers with “volumes of information” about the various benefit offerings, according to the report. Rather, employees should be given more bite-sized digestible tidbits throughout the year.
“Supporting employees with relevant and digestible educational information about their benefits outside of the enrollment period can help them become better consumers and also benefits ambassadors,” the authors write.
Offering workers decisionmaking tools during the enrollment period can also help employees who lack benefits expertise, particularly if they are also risk-adverse.
“How plans are designed, how they are communicated, what things are called, and how they are explained all contribute to what employees choose,” the authors write. “This is especially true when they don’t really have a strong understanding of deductibles, coinsurance and out-of-pocket maximum or appropriate decision guidance. They look at a few proof points like their premium and deductible and may end up spending more (or less) than is appropriate for their situation.”
Employers that provide such support to their workers can also help their own bottom lines, according to the report. “The goal is to ensure that both employers and employees are receiving the maximum return on their benefits investments by helping employees choose the right benefits, in the right place, at the right time,” the authors write.
Read more: