Voluntary benefits and gas prices

There is a certain advantage to longevity. Specifically, I have been writing this column for almost 20 years. More than 14 years ago, the January 2008 issue contained an article titled “It’s tough to compete with the price of gas.” When thinking about how to address the issue of inflation facing employers and employees this year, I dug out my copy of this article to see how today’s situation compares.

The price of gas when the article was written in late 2007 was a little over three dollars a gallon. Today, the average price of a gallon is around $4.50, and the upward trend seems to be continuing. But that’s not all. Anyone who has shopped for groceries in the past few months knows that food prices have also gone up significantly, while overall inflation in the economy is trending around 8%.

Related: 10 states hardest hit by inflation

The core concept behind the original article applies today, even moreso than it did 14 years ago: Consumer demand for items like gasoline and food is inelastic; people are going to need these items regardless of the price they have to pay.

The problem this creates is that inflated prices are rising faster than employee income. If employees have a finite amount of money available and must spend a bigger percentage of that money on gas and food, intangible products with more elastic demand, like most employee benefits, may be challenged to keep or expand the employee’s wallet share when it’s time to elect and enroll in benefits.

How can we respond? The answer hasn’t changed much:

“The challenge we must take up is communication to employees to educate them and ensure that our products are viewed as necessities and not as dispensable items. We need to constantly remind customers of the value of our products.”

There is some good news. Today, we are better prepared to meet the communications challenge.

1. Employee benefit administration systems have matured in their connectivity with employees. Employees connect with these systems much more often, not just during open enrollment time. Uses include provider lookups for medical and dental providers, claims filing, and portability services. This also facilitates enrollment of many products on a year-round basis.
2. These systems enable communication with employees through multiple techniques: website, email, text, chat, videos, apps, etc. That means employees can be educated throughout the year using the method they prefer.
3. Employers are now embracing the concept that well-communicated benefits are much more appreciated by employees and their families. This allows benefits brokers and advisers to work with the employer’s benefit team to create year-round communications campaigns. The focus is on helping employees understand their benefits better, and educate about how easy it is to use benefits (especially file claims and receive payments).
4. Our audience is more receptive than ever. The pandemic has touched nearly every American, either directly or indirectly. As a result, employees are much more open to considering products that protect them in times of health issues. The level of stress on employees, resulting from both the pandemic and inflation, has caused employers to be much more aware of the value of offering products and services that help employees cope.

We have a terrific opportunity to help employees in a difficult environment. We can provide them with education that will help them prioritize their needs, understand their ability to protect these needs through voluntary products, and make great decisions.

Read more: 

• Voluntary benefits on the rise as employers fight for talent
• How to combat financial stress during inflation and other economic stressors
• Back to voluntary benefit basics