This Open Enrollment’s Task: Making the Value of Benefits Clear

Getting employees to pay attention to their benefits during open enrollment — and to get them to feel value in their offerings — has long-been an issue for employers. But this year, due to employees’ heightened financial strains, that task may carry more weight.

Employee financial stress has hit recent highs. Employees say wages are not keeping up with rising costs of living. Part of that equation is rising healthcare costs — projected to jump 9.5% in 2027 — which are making workers feel even more stretched. 

This year in particular, “employees may have an especially difficult time seeing the value of coverage when they are simultaneously watching their bills rise,” said Hans Leida, principal and consulting actuary at Milliman, in Minneapolis. “It’s very hard for someone who might already be struggling to make ends meet to see the bill going up for their insurance coverage and maybe the benefits going down at the same time.”

In short, employers have their work cut out for them this enrollment season.

“There’s not a magic wand employers can wave” to fix healthcare costs or to convince employers about the value they are getting in their benefits, Leida said. But there are various tactics HR and benefits leaders can embrace to help employees understand and appreciate their benefits.

Research: CHRO Economic Outlook

Show Employees How Benefits Can Save Them Money

In a high-cost environment, one of the most valuable messages employers and HR leaders can deliver is also one of the most practical: helping employees select, and use, their benefits to spend less.  

For instance, benefits like pet insurance can be a cheap addition but save employees big bucks for their animal family members. Voluntary benefits, like critical illness insurance, can also do the same. 

Courtney Perez, vice president of education and engagement at Atlanta-based benefits consulting firm OneDigital, said testimonials from employees explaining how specific benefits have helped them and saved them money is one of the best ways employees can feel like an organization’s benefits have value. 

“Employees will listen to other employees,” Perez said. A peer explaining how a benefit helped their family navigate a medical event or how they used pet insurance can make benefits feel more real and valuable, she said.

HR leaders can also share information on how specific healthcare coverage options can ultimately save workers money in the long run or even how specific decisions — like where to go when facing a health ailment — can help.

San Francisco-based benefits firm Collective Health, for example, educates its employees about when an urgent-care visit may make more financial sense than an emergency-room visit, as well as how using freestanding clinics for certain laboratory services can reduce costs. 

“If you educate them early and often about things like that, they can make decisions that is going to cost them less,” said Jacque Ludwig, Collective Health’s vice president of total rewards and people operations.

Perez agreed, saying that helping employees understand preventive care, provider choices, deductibles, and other elements of their plans is key to helping save money. The goal isn’t simply to reduce costs for the employer, it’s to help employees understand how their decisions affect their own wallets. “It’s really about sharing with them, ‘Here’s how you can save additional dollars,’” Perez said.

Health savings accounts (HSAs) are another opportunity for saving, Leida said. For employees who can contribute, employers can explain how HSA contributions work, how employer contributions factor in, and where applicable, how investment options can help employees use the account as a longer-term healthcare savings vehicle. 

Leida described HSAs as “a really underutilized opportunity for many individuals,” noting their tax advantages and the fact that employers often contribute to them. But he also cautioned that not every employee has the financial flexibility to contribute a substantial amount.

Use Total Reward Statements as a Retention and Recruitment Tool

One of the simplest ways employers can help employees understand their benefits is to show them the entire investment the company is making in them. Total compensation statements, which provide the total monetary value of employer-paid benefits and are shared with employees to paint a comprehensive picture of what's being provided, are one way to do that.

Employees tend to focus on what comes out of their paycheck. They may see their health insurance premium increase without necessarily seeing how much their employer is contributing toward that coverage — or considering the value of retirement contributions, paid time off, and other benefits.

“There are many employees who only see what they have to pay for their benefits,” Perez said. “They don’t see the value that the employer is also investing in them.”

She described total rewards statements as both a retention and recruitment tool, because they help employees see the investment the employer is making beyond base pay.

That context may be particularly useful this year, when employees could otherwise focus almost exclusively on what they are paying.

Sample Form: Total Compensation and Benefits Statement  

Ensure Employees Know What They Already Have

Another persistent problem with benefits is surprisingly basic: Employees don’t always understand their coverage, and they may not know about all of the benefits available to them.

OneDigital’s recent employee value perception research found that just 54% of surveyed employees reported a high level of understanding of their health insurance, while 53% said the same about retirement benefits.

The answer isn’t necessarily to overwhelm employees with more information during the two or three weeks of open enrollment, but to start weeks before enrollment begins.

Collective Health, for example, begins its enrollment messaging weeks ahead of its enrollment window. The company uses town halls, Slack messages, email, mailers to employees' homes, and reminders in its offices. It also hosts “Wellness Wednesdays” to start getting employees engaged before they have to make elections.

The company has found that repetition matters. “You tell them once, they’re not going to remember,” Ludwig said. “It’s important to get that engagement to make sure they’re making those well-informed decisions before it’s too late.”

While robust education around enrollment season is vital, Perez said it’s also vital that benefits education is happening year-round. Employees who receive education throughout the year may arrive at open enrollment feeling less stressed because they have a better understanding of their options and how their choices affect their finances. They also may have more appreciation for their benefits value because they know more about them.

Checklist: Year-Round Benefits Communication: A 12-Month Calendar 

Transparency Is Key

One important piece of the puzzle that cannot be forgotten this year is transparency. 

Difficult financial pictures are making employer communication about rising costs and benefits changes particularly important, experts said. Employers should explain not only what employees must pay, but also what the organization is doing to manage rising costs and how much it continues to contribute.

“Employers have tried hard to shield their employees from rising costs,” Leida said. “But there is a limit to how much employers can absorb as healthcare costs continue to rise.”

The same principle applies when plan changes are necessary. Rather than simply announcing a higher deductible or a change in cost sharing, employers can explain the trade-offs behind the decision.

Ludwig said she’s been transparent with its employees about the cost pressures Collective Health faces and the decisions it has made in response. The company did not increase employee premiums for the fourth consecutive year, Ludwig said, while making changes elsewhere in its medical plan design.

“Even with these changes, we are still very competitive,” said Ludwig, noting that it also emphasizes how much of the benefits cost the employer continues to cover.

“It’s key to be as open as you can,” she explained. “It’s important that employees understand why you have to make the decisions you do.”