Speaking with employees soon after they completed the open enrollment process provided revealing insight for industry research firm LIMRA into why plan participants make the benefit decisions they do — and how employers and their advisers might improve the experience.
Market penetration rates for supplemental benefit plans are generally low, LIMRA’s Associate Research Director Ron Neyer told attendees Thursday at EBA’s Workplace Benefits Mania conference, ranging from a high of 54% for short-term disability to as low as 27% for cancer and critical illness products.
The typical reaction to such benefit offerings from employees is, “No thank you. I’m not interested,” Neyer said. Because the employer is usually focused on major medical, “other benefits are often blurry to employees.”
But, LIMRA found employees are open to taking a closer look at voluntary benefit offerings with the right communication and planning ahead of the open enrollment process. “The biggest takeaway is peoples’ minds can be changed,” Neyer said.
Making that change starts with “thinking of open enrollment as more of an execution time,” he said, adding that advisers should do the groundwork first by reaching employees and educating them on products long before the brief enrollment period. This is because for the majority of employees, by the time enrollment starts they’ve already made up their mind on benefit decisions, Neyer said, and it’s usually to keep the same plan from the previous year. Only 36% of employees make any changes to their current benefit plan, he added.
“If they don’t purchase it the first time, they’re not going to buy it later,” Neyer said.
Misconceptions about products are a key factor in swaying employees not to purchase them. For example, employees who participated in LIMRA’s research wondered why they’d need a critical illness product when they already have a major medical plan, or thought accident and hospital indemnity plans sounded like overlapping benefits.
“Abstract terminology is another big problem the industry struggles with,” Neyer said. Terms such as ‘elimination period’ are foreign concepts to many employees.
Create a spark
Instead, advisers need to simplify language and “create a spark” in whatever way possible — before open enrollment — to pique employee interest in products before they’re inundated with too much information.
Advisers should connect on an emotional as well as informational level to make messages relatable. “You need to get them to want to learn more,” he said, adding that testimonials from people who’ve needed the benefits are a powerful tool.
“Nothing is off limits” in communicating the message, Neyer said, suggesting advisers use YouTube videos, Facebook pages or even billboards to get the product message across. One employee who suggested the billboard option explained that it would capture their attention at a time when they can’t focus on anything else.
With four generations in the workforce, “no one method is going to appeal to everyone,” he said.
After a couple of hours of speaking with LIMRA’s employee focus group, many of the participants suggested they would have approached open enrollment differently, had they had the level of understanding of the benefit products available to them that they received during the focus group discussion.
While it’s not possible to spend hours discussing benefit options with each individual employee, Neyer encouraged advisers to test a range of communication efforts throughout the year.
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