The various benefits that can be offered to employees are complex and dynamic. More often than not, employees don’t even realize the array of benefits they have available to them.

 

Though millions of Americans across the country have lost jobs due to the pandemic, 43 states have experienced record-setting job losses, 59% of those still employed reported they plan on paying more attention to their benefits this year.

 

What makes benefits confusing?

First, benefit options can have varying costs and categories. For example, below are some of the different benefits offered that cover certain aspects of an employees life:

• Healthcare
• HSAs/FSAs
• Dental
• Vision
• 401(k) or 403(b)
• Mental Health
• Financial Wellness
• Pet Insurance
• Life Insurance
• Auto Insurance
• The list goes on…

 

Not only are there a vast array of benefits, many times these benefits come with fine print and hidden clauses that leave the end-user further confused once they’re locked in.

 

Second, despite the numerous benefits that can be offered to employees, benefits literacy has proven to be a challenge. 

 

• More than 1/3 of employees are openly confused by benefits packages
• Over 50% only have the foundational information of benefits
• Less than 1 out of 5 employees claim to fully understand their benefits

 

Gen Zs, the newest members of the workforce, actually reported to be the most confused about their benefits. Besides being the newest to the workforce, they also have the least contextual knowledge about benefits in general.

 

Third, benefit communications are one to many.

Organizations provide a plethora of benefits for their employees which means benefit communications could include an email with 10 different benefit options, and 10 is on the modest side…

 

Employers look to protect their employees’ inboxes, rightfully so, but this could also lead to major confusion or even ignorance from employees on knowing what benefits they have available to them at the tip of their fingers. 

 

So, how do employees decide which benefits they want?

 

Employees Are Risk-Averse

Many employees choose their benefits based on the least amount of risk it would cost them.  Part of this risk aversion is a naturally disproportionate importance on perceived loss. 

 

When weighing a more expensive option to a cheaper option, many employees would consider paying more upfront for the expensive benefit option because they believe these will protect them from uncertain events that could have a large out-of-pocket cost without actually understanding the entirety of the plan. This is especially clear in healthcare, dental and vision.

 

When it comes to other benefits, most employees agree they’d prefer not to spend additional resources on benefits if they don’t have to. Broken out by generation, it looks like this:

 

• 29% of Gen Zs
• 41% of Millennials
• 44% of Gen Xs
• 48% of Baby Boomers

 

Almost 1/4 more of Baby Boomers than Gen Zs would rather save their money than spend it on voluntary, non-essential benefits. Historically, Baby Boomers are the “savers” who value routines and the status quo. Not surprising that they think more rationally about their benefits and the effects on their savings (or retirement fund) for the future.

 

As a whole, employees like to avoid risks and choose the safest, clearest path… 

 

Sometimes, the “clearest” path is the really the messiest path.

 

Employees Are Prone to Financial Vulnerability

Benefits, when used correctly, should help reduce the costs employees’ have long-term,  which employees need and crave. Last year, 

 

• 4 in 5 employees reported living paycheck-to-paycheck 
• 37% of employees had some student loan debt between them and their spouse
• 41% reported being struggling to complete their monthly bills 

 

Financial vulnerability only gets worse post-pandemic.

 

From a recent TrueConnect survey that closed in August 2020, we found that 43% of employees have had their partner or spouse fired or furloughed, or lost working hours which means less income, but it also means there could be a reduction in available household benefits for many Americans. 

 

Remove the Complexity

Choosing great benefits is important, yes. But what may be more important is how they are communicated.  

 

Provide guidance tools to help your employees make better choices. Simplify options by type, cost and impact to the employee. Especially now with Covid-19, prioritize your employees’ needs and perspectives before providing 20+ benefits that come with some kind of cost.

 

Removing the complexity through consistent communication and smarter options will increase overall benefits literacy across your organization. 

 

Taking Care of Your Employees

Learn how you can become a hero to your employees by implementing a system to resolve short-term financial emergencies without budget changes on their end. Download our Webinar: Creating Financial Stability today to learn more.