The next few weeks are the height of Annual Enrollment season.
It's that magical time of year when millions of US employees make decisions about their benefits coverage for the coming year.
They excitedly attend benefits fairs and meetings, review enrollment materials, look at videos and discuss costs and coverage options with their family members. They carefully weigh their options and make informed, cogent decisions.
Or do they?
Last year, we analyzed data from nearly 500,000 employees using our benefits recommendation engine to understand what people were thinking as they made their benefits decisions. How, you ask? Our MyChoiceSM Recommendation Engine asks a series of specially designed questions that uncover an employee’s health, emotional and financial situation in order to return a personalized suite of benefits suggestions.
What we found was that during 2019 Annual Enrollment, most employees made decisions that were informed by their state of mind. And, for many, that included poor benefits literacy, a lack of financial well-being and risk aversion.
- Most people have a limited understanding of their benefits. When asked about their benefits knowledge, 30% were scratching their heads, 51% could tell you where they left their ID card and just 19% felt truly competent. That means that over 80% of employees don’t have the benefits expertise to make what are often complex financial and lifestyle choices.
- Employees don’t like risk. Several of the questions in the MyChoice Recommendation Engine help uncover the user’s feelings about risk. Overall, 65% of employees identified with activities that have low risk. When it comes to benefits, most feel uncomfortable with the risk associated with a large bill. Among all employees, half report they would be “panicked” by a large ER bill, while 41% could cover it but would prefer not to. Not surprisingly, the panic is more pervasive the less people make, but even among those earning $100,000 or more, a large bill would still cause some heartburn for more than a quarter of employees.
- Financial insecurity is common. While most employees (57%) are able to save sometimes, just under 20% never save. As a result, 44% say they wouldn’t be able to cover a large healthcare bill. If they faced a large bill of any kind, 21% would go into debt to cover it. However, an alarming 19% are working without any safety net and have no plan for what to do if faced with an unplanned expense.
Each of these factors alone could cause employees to make less than optimal benefits decisions. Together, they can create a situation in which emotions and risk aversion lead to bad decision-making, especially when employees don’t understand the benefits they’re choosing.
Fast forward 12 months and here we are, in the thick of 2020 Annual Enrollment. Benefits haven’t become less complex, and the workforce hasn’t gained significant financial ground. Chances are most employees haven’t boned up on their benefits knowledge in the last year. So, employees making their elections now are very likely thinking and behaving similarly to how they thought and behaved during the last Annual Enrollment.
That’s why it’s important to address benefits literacy—both during Annual Enrollment and throughout the year. Providing employees with a solid foundation of understanding can help them make more informed choices.
In addition, decision guidance plays a vital role in helping connect employees to the best options so risk aversion and emotions don’t dominate the choices they make.
Want to learn more about what drives employees during Annual Enrollment, and how you can help them be better benefits consumers? Our MyChoice Recommendation Engine Benefits Insights Report offers suggestions. Get it below.