Only half of employees understand their benefits. Here's what HR leaders can do about it
In an attempt to entice and keep top talent, organizations are anticipating employees' needs and offering more comprehensive benefits packages and perquisites to complement the salary and other financial compensation. However, data shows that the majority of employees do not understand their benefits or even read benefit materials: Up to 80% of companies reported that their employees do not open or read benefit materials. But before you open your employee engagement playbook to address this issue, take a moment to understand why this is happening.
Investigating the main reasons why employees struggle with the benefits plans can help companies redesign their benefits and help employees take advantage of the programs that are offered. So why don't employees understand the benefits?
1. Benefits are not top of mind for most employees.
As human resources professionals, we think about these things every day, while typical employees are focused on their jobs, their family and friends, and their daily lives. The major benefit plans are insurance programs that are used infrequently because they are exactly that: insurance that can protect us in case something happens in the future.
When it comes to medical benefits, in my observation, an average of 20-40% of employees will have no claims or will use preventive care, keeping them away from a doctor’s office, and less than 10% of employees will file a disability claim (including maternity leave) in a year.
With medical plans, most costs and uses are concentrated in a minority of individuals, and these are the people who tend to understand their health benefits very well. Retirement involves a benefit not accessed until a future date that, especially for millennial employees, might feel like an eternity away, and therefore is something that they don’t need to even think about at this point.
Vacation and paid time off policies (PTO), on the other hand, are the most-understood employee benefits, and that’s not because they are easy to understand or they are communicated better. Employees care about paid time off, and just about everyone uses some each year.
One way to address this issue is to analyze the employee populations and adjust benefit communications depending on what matters most to employees. Then educate the employees about the programs that might not be priorities for them now but could and should be in the longer term. It’s important to remember, however, that even with great educational material, people won’t pay attention or remember the details unless the plans are used regularly, so you really need to make a case about why this information is relevant for a particular employee group.
2. Benefits are complicated.
Many benefit plans involve complex rules and jargon driven by the IRS code or insurance companies that are confusing and complicated to employees.
For example, changes to benefit elections or amounts to contribute to a flexible spending account (FSA) and health savings account (HSA) are governed by the IRS. Benefits professionals and administrators consult with advisors and legal counsel to comply with these rules. In the meantime, employees are expected to manage this benefit while having much less understanding of what applies to them. The available information can be overwhelming, even for those with the interest and patience to reach through it. No surprise that the reaction to comprehensive benefit materials is “TL;DR.”
When it comes to the benefits you offer, ask yourself these questions: Are you offering a true choice, and is there a way for you to make the offer simpler? And, is the choice easy for employees to make? When it comes to communicating the benefits, is there a way you could explain it in simple terms so that anyone could understand it? Simplifying the benefits and communicating the complex terms in a simple and clear manner are the most efficient ways to address this barrier.
3. Employees are overwhelmed with benefits tools and resources.
As companies work with different vendors to deliver employee benefit programs, in most cases there is more than one point of contact for employees to get in touch with when they want to use a benefit. Each provider has its own means of contact, a platform to book an appointment or manage their data, and other rules and requirements.
For this very reason, employers are increasingly offering navigation or advocacy services to help employees navigate this process, find the best provider and check whether the provider’s services are covered.
While it’s not always realistic to manage to a small panel of benefit vendors, employers can address this challenge by streamlining the employee experience and guiding employees toward the right resource in a user-centric manner. Whether it’s creating a benefits website, hosting benefit fairs or setting up an infobot to answer the frequently asked questions, you can help employees navigate the complicated world of employee benefits.
The benefits experience is always complicated, but it doesn’t have to be that way.
Understanding the barriers that prevent employees from using the benefits is a crucial first step in adjusting and redesigning employee benefits programs.
By embracing simplicity by design and streamlining employee experience, companies can create benefit programs that truly matter to employees, and are both easy to understand and use. As Leonardo Da Vinci is credited with saying, “Simplicity is the ultimate sophistication.” It’s time you bring this to your employee benefit experience.
The article was originally published in Forbes magazine.
About the author
Chris Renz is a co-founder of Nua Group, a human resources advisory firm based in San Francisco. Chris has more than 20 years of experience helping organizations of all sizes and industries address their most significant benefits challenges. He has helped Fortune-500 companies develop market-leading programs and guided smaller firms as they scale programs to match their growth.