Benefits. Open. Enrollment. Three words that evoke an array of emotions that can be most closely associated with going to the DMV, sitting in traffic, or filing tax returns. It can be uncomfortable, frustrating, and even intimidating. Truthfully, never before have benefits played such an important role in the lives of Americans, yet little has changed in the way they are communicated and selected. Pre-stuffed folders containing brief plan descriptions or web portals with fancy interfaces presented over boxed lunches during the holiday season – no wonder it feels like an irksome yearly task. From an employer’s perspective, benefits represent the second largest budget line item after payroll, so why isn’t there a better way to approach the process?
To better understand this dilemma, let’s examine the relatively recent shift in how responsibility is shared between employers and employees with regard to their health benefits. Given that health insurance premiums in the US have risen by a staggering 740% since 1984, perhaps the best analogy is the transition from pensions to 401(k) in the 1980s, when many Americans were forced to participate in their retirement planning for the very first time. Choosing the correct funds, risk profile, or even the advisor could mean the difference of retiring or continuing to work well past 65. Fast forward to today, where employees have more varied options and a higher share in the cost for healthcare coverage, it can be shocking to learn that the leading cause of bankruptcy in the US is medical debt. If we consider that only 9% of the population is currently without health insurance, it dramatically underscores that the degree to which employees are engaged in benefits can have comparable long-term impact as their retirement strategy. The major difference between these two scenarios is that retirement plans with market exposure offer little to nothing by way of insuring future outcomes, whereas with healthcare coverage, there are a variety of methods by which employees can protect against out-of-pocket costs as plans continue heading in the consumer-driven direction.
Given how the benefits open enrollment process has looked for decades, it can feel as though options are few for taking a fresh approach. Not to mention, the psychological factors that play a major role: employers fear putting employees in a position where they feel forced to do something. Despite the best efforts of HR professionals, employees can be apprehensive about asking questions and appearing uneducated about the benefits or that their personal health information may impact their relationship with the company. Surveys on benefits frequently fall flat because employees worry that expressing interest in a new benefit may be misconstrued as their commitment to purchase. Often, the end result of this dissonance is the go-to “passive open enrollment” approach. Nowadays, “benefits auto-pilot” is the term used when individuals simply continue with whatever they elected in the prior year’s open enrollment, the problem being, benefits aren’t designed to evolve on their own to best serve the policyholder as their lives change. HMO, PPO, HDHP, HSA, HRA, FSA, EAP, STD, LTC, VAS, etc. – certain plans can be a godsend for one person and a curse for another, so how do companies make this easier for their valued employees?
Given all of this uncertainty, it’s not surprising that the insurance enrollment process can bring on such anxiety. In our 20 years of experience, it all starts with establishing the value the company wants to bring through its benefits package and planning to give everyone the experience of equal opportunity to understand and elect the right coverage. If you look at a commonly-used model for employee engagement, you will see that the formula is remarkably similar to our approach to benefits:
With all the effort and expense that goes into attracting and retaining top talent in today’s marketplace, employing these two models simultaneously is a no-brainer. Getting the right guidance to make this a reality is often the missing link. The best part is that partnership with an agency specializing in the engagement aspect of your benefits doesn’t have to mean changing existing relationships or carriers. It’s never too early or too late to get help, so start the conversation today - your employees will thank you!