2020 open enrollment: Employees value benefits, still struggle with them
Even with employer-sponsored benefits, many workers are struggling with financial insecurity.
The challenges to American workers posed by the dual crises of global pandemic and economic setbacks are illustrated in a new report on workplace benefits from Guardian Life. The survey reveals that workers say they value their benefits, but still find them confusing and in some cases inadequate to deal with the stresses they are currently facing.
“Before the pandemic, record low unemployment, healthy corporate earnings, and a strong stock market were masking the financial struggles of many working Americans,” the report said. “In January 2020, 4 in 10 full-time workers indicated they were living paycheck to paycheck and felt as though they were losing ground financially, especially those experiencing much higher out-of-pocket medical costs and/or significant college debt.”
Related: COVID-19-related financial stress is hurting employee health and well-being
At the end of the year, the report added, even more Americans reported feeling financial stress: “Concern about paying monthly bills and ballooning debt are negatively impacting emotional and physical health. In fact, all dimensions of Guardian’s Workforce Well-being Index declined from January and May 2020.”
Financial stress coming from many directions
The report describes 2020 as “one of the most challenging years in recent memory.” It noted that more than 20 million Americans lost access to benefits during the shutdown phase of the pandemic, with unemployment peaking at 14.7% in April of this year.
“The new coronavirus outbreak has not only threatened physical health, but it has caused financial stress from loss of jobs and benefits and contributed to increased depression, anxiety and substance abuse,” the report said. “In just a few months, the US economy went from record-high median household income and record low unemployment to some of the worst economic indicators since the Great Depression.”
At a time of economic stress, it seems most workers value their benefits: a majority of those surveyed (52%) said they strongly agreed that they would face financial hardships without those benefits, and 67% said they would not be able to afford things such as health insurance without their benefit plans.
However, even with job-sponsored benefits, many workers are struggling with financial insecurity. Of those reporting high financial stress, 74% said they had very high medical deductibles, 67% reported having college debt. Workers in high-deductible health plans (HDHPs) are less likely to feel able to cover a major medical event: 55% of those in HDHPs say their plan would be adequate, compared with73% of workers in a traditional health plan.
In addition, the survey found that in the past year, 40% of workers in HDHPs said that they ignored medical advice or neglected their health by skipping scheduled doctor appointments, not filling prescriptions, or not following through on tests or X-rays, in order to avoid paying out-of-pocket costs toward their deductible.
The report noted that since 2007, there has been an increase in the average US medical plan deduction, from $580 to $1600 for single coverage. However, employers don’t seem convinced these strategies are working: only 15% say increasing employee cost-sharing is highly successful when it comes to controlling costs. Only 19% of employers say implementing HDHPs is a highly successful cost-containment strategy.
Employees tend to overestimate their benefits literacy
As 2020’s open enrollment season began in the US, the survey found that although workers say they have high confidence in their benefit choices (76%), employers grade workers much lower in their understanding of benefit plans. The survey said that 54% of employers believe their workers have a strong understanding of their benefits. And 39% said they need to do a better job of educating employees on employee benefit selections during open enrollment.
The survey gave employees a pop-quiz on insurance benefits and terminology and found that the average score was a 70%, or C-, which was down slightly from a 72% score in 2016.
The report added that some workers don’t spend much time on choosing their benefits: the average time spent on benefit selection was 1 hour and 40 minutes. Three in ten workers (29%) said they automatically re-enrolled in their benefits from the past year because they found the process overwhelming. And 37% said they spent very little time looking at options other than medical benefits.
The report said a more holistic approach to benefits, with more voluntary benefit options, may be increasingly attractive to employers. “A growing minority of employers now offer supplemental health benefits on a voluntary basis, such as hospital indemnity, critical illness, and accident insurance,” the report said. “Ownership of these benefits has risen gradually in the past six years.”
The report concludes by discussing strategies for communication between employers and employees on benefits. It recommends more targeted, personalized communication, and said digital tools result in higher satisfaction among employees when it comes to communicating about enrollment: 79% of employees said they were satisfied with a digital approach, compared with 37% being satisfied with a paper system of benefits enrollment. A mixed approach resulted in 53% of respondents saying they were satisfied with the process.
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