As important as benefits are to employees, you think that those employees would make every effort to understand their benefits packages. But such thinking apparently is not correct. Recent research from the International Foundation of Employee Benefit Plans (IFEBP) shows that fewer than 20% of America’s employers are confident their workers fully understand their benefits.
Is your company one of them? If not, is it likely your company offers benefits your employees don’t really have a grasp of? These are important questions in a day and age in which generous benefits packages are a big part of recruiting and hiring top talent.
BenefitMall, a Dallas company that offers payroll and benefits administration services, says that the IFEBP survey data explains exactly why employees do not understand their benefits. Armed with that knowledge, companies can take the necessary steps to rectify the situation.
Employees Don’t Read
The top reason employees don’t understand their benefits packages is simply the fact that they don’t read the materials provided. The numbers suggest 80% of benefits materials go unopened or unread. That is a big problem. If printed materials are the primary means by which employers disseminate benefits information, they need employees to actually open and read those materials.
So what’s the problem here? It could be that employees are simply overwhelmed with information and just don’t have time. But a more likely culprit is found in the second reason employees don’t understand their benefits: they don’t speak the language.
Information is Too Complicated
Information regarding benefits packages is almost always put together by professionals who fully understand all of the terms. These are people who are very familiar with industry jargon relating to health insurance, 401(k) plans, and the like. What they fail to realize is that the average employee doesn’t speak that way.
If employees know they will be lucky to understand 10% of what they read about their health insurance plan, how likely is it that they will attempt to read it? Likewise, if all the literature pertaining to a company’s 401(k) plan is written from the perspective of a professional financial adviser, how likely is an employee to dedicate precious time to reading literature written in what seems to him/her like a foreign language?
Note that survey data shows that 49% of U.S. workers do not understand the benefits materials they are provided. The obvious solution here is to simplify the literature.
A Lack of Perceived Value
Some 31% of employees don’t bother familiarizing themselves with their benefits packages because they perceive said benefits don’t offer any real value. Whether or not the value is there isn’t the point. The point is that where a perception of little value exists, there is little incentive to make oneself familiar with benefits.
Let’s say a company offers a high deductible health plan in order to keep premium payments as low as possible. The deductible is so high that one third of the company’s workforce doesn’t even use the benefit because they rarely go to the doctor. These are employees who have no vested interest in understanding how the health plan works. They don’t use it anyway.
Changes Are Needed
It is clear that employers aren’t confident their workers understand benefits packages. It is equally clear that changes are needed. If employees don’t understand their benefits packages completely, it is nearly impossible for them to use said benefits to maximum advantage. And then what is the point of offering them?
Employers need to find better ways to communicate. The more workers understand, the more their benefits will actually benefit them.