10 reasons why employees buy (or waive) voluntary benefits

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Based on groundbreaking research, a new report — Who Buys Voluntary Benefits and Why: 2016 Employee Benefits Enrollment Study — yields important, and in some cases confounding, insights for employers, brokers, enrollers and carriers. The nationwide study captured attitudes and perceptions of 2,877 full-time employee respondents, drawn from a variety of industry verticals, and focused on three key questions

1) What are the reasons (drivers) why employees buy or waive 10 types of voluntary benefits (medical, dental, vision, life, STD, LTD, critical illness, accident, hospital and wellness)?

2) Are there differences in buying behaviors across different types of employees?

3) How satisfied are employees with the benefits offered to them; how confident are they in their benefits-related decision-making, and, most importantly, is there a link between employees’ benefits behaviors and their feelings toward their employer?

In addition to the quantitative results generated through 23 survey questions, more than 10,000 verbatim comments were captured and content-analyzed to generated additional “voice of the employee” voluntary benefits insights.

Here are 10 key insights arising from the research:

1) Both rationale and emotional factors drive benefits decision-making.
Across all benefit and employee types, decisions to enroll in benefits are based on a large and complex combination of both rational drivers (e.g., “the price is right” or “I like the plans details”) and emotional drivers (e.g., “better safe than sorry” or “peace of mind” or “it feels good to be covered”). Other important drivers in enrollment decisions included plan details, carrier reputation, convenience, expected payback and advice of a friend or family member.

In contrast, decisions to waive were almost entirely driven by a smaller set of rational considerations (e.g., “I can’t afford it” or “I already have enough insurance” or “the value offered is not worth the cost”).

2) Demographics and firmographics have less to do with benefits decision-making than expected.
A major unexpected finding was that with few exceptions, employee demographics play less of a role in enroll/waive dynamics than the study’s researchers had hypothesized. Rigorous analysis of the data showed only moderate differences in employee benefit decision-making by age, gender, race or ethnicity, household size, composition, or income, education level, or region/state of residence.

3) Employees rely on a small, consistent set of information sources to help inform their benefits decision-making.
The study sought to explore which sources of information — and how many of them — employees use to make their benefits decisions. The most frequently cited sources were: 1) print material from the employer, 2) online content from the employer, and 3) print material from the carrier. This pattern was consistent across those who enrolled and those who waived.

Perhaps somewhat surprisingly, approximately 20% of respondents reported that a friend or colleague influenced their decision-making, making this the fourth most commonly cited information source and highlighting the role of word of mouth in the voluntary benefits marketing mix.

Other potential information sources — online content from the carrier, group meetings, one-on-one meeting with manager or HR, and one-on-one with insurance rep — were considerably less frequently mentioned.

On average, employees who enroll in benefits use one to two sources of information to help make their decisions (the average varied across benefit type from 1.8 to 1.6 information sources). In contrast, employees who waived benefits use less information sources (depending on benefit type, and average of 1.2-1.0). These patterns of information source usage were considerably lower than the study’s research team had hypothesized would be the case.

4) Employees are satisfied with the communications vehicles through which benefits information is conveyed to them.
In order to better understand how effectively employees believe benefits-related information is being conveyed to them, researchers asked this open-ended question: What changes in how benefits-related information is conveyed to employees would you recommend?

Surprisingly, only 14 respondents (or .4% of participants) offered up a usable response and there was not pattern or theme to the few suggestions made. The study’s research team interpreted this outcome to mean that employees are generally satisfied with how benefits-related information is being communicated to them — print material, online material, group meetings, etc.

Also noteworthy, this question presented the first of two opportunities for employees to say that the benefits information being share with them was too complex, detailed, or sophisticated (in terms of reading level). They did not. Not a single study respondent took the opportunity to raise any such matters, which the research team concluded meant that they are non-issues for most employees.

5) A significant percentage of employees take all voluntary benefits that are offered, but many others appear to reach a point of voluntary benefits saturation.
Between 25-30% of the study’s respondents enrolled in every voluntary product offered. However, carefully analysis of verbatim comments of those who waived one or more benefits revealed that at least some employees reach a point of benefits “saturation or fatigue.” Comments such as the following were common:
· “I already have way too much insurance. Enough is enough.”
· “I just don’t need all this. You can’t cover every conceivable contingency.”
· “I already have so many policies I can’t keep it all straight. Even more insurance just adds to the overload.”
· “I could spend half my free time reviewing and deciding on various benefits my employer keeps sending my way. I finally called it quits.”
· “It’s [reviewing benefits options] exhausting. Life is too short. I just go with the basics and take my chances on all the other things that could go wrong.”
· “Medical, dental I get. But some of these other options, I’m just not sure about the risk/reward, the payback on all those additional dollars to invest. I’ll take my chances.”

6) Employee confidence in their benefits decisions is high.
In addition to examining the drivers of benefits decision-making, the study also sought to capture “macro” employee attitudes and perceptions regarding the benefits offered to them.

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With so much change taking place across the benefits landscape in recent years — more plans and options, more complexity, more information to process, increased cost-shifting, ACA, etc. — the study’s research team’s a priori hypothesis was that moderate or even high levels of employee dissatisfaction with the benefits being offered, the enrollment process, and related matters would be reported.

Yet, the actual research results revealed the exact opposite. Across a range of measures, employees are surprisingly positive about their benefits and their benefits decision-making experiences.

For example, when asked, “How confident are you that you made a good decision about a given benefit?” respondents reported surprisingly high confidence levels, regardless of whether enrolled or waived. Analysis of verbatim comments suggested that some “waivers” misunderstood or under appreciated the potential risk or exposure in not enrolling. In this sense, these employees may have made a decision that is in fact a potentially bad one, but they were nonetheless highly confident in the decision made.

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7) Overall employee satisfaction with their benefits is high.
When presented with the question, “Overall, how satisfied are you with your employer’s benefits program as discussed in this survey?” the study’s participants reported surprisingly high levels of satisfaction.

Interestingly, the three most frequently cited reasons for satisfaction with benefits were:
1) the cost to the employee;
2) the quality of the coverages offered;
3) the number of benefit types offered.

Taken together, the results of these two questions indicated that employees generally gave employers credit for dealing with the costs of benefits as best they can, making quality benefits packages available, and the number of type of benefits to meet their specific needs and expectations.

8) Nearly four in 10 respondents say their benefits have improved in recent years.
The study’s research team also wanted to assess employees’ perceptions of the trajectory of benefit plans — getting better, getting worse, etc. The team’s a priori hypothesis was that little or no change would be reported or that perceptions were trending downward. In fact, employee perceptions of benefit plans is considerably more nuanced, with 37% saying they have seen some degree of improvement.

In one of the few generational differences noted across the study results, older employees tended to have a more negative perception of their benefits direction than did their younger colleagues.

9) Sixty-five percent of respondents are more likely to recommend their employer as a good place to work because of the benefits offered.
In yet another marker of positive employee benefits attitudes and perceptions, high levels of respondents reported that they were more likely to some extent to recommend their employer to a friend or relative as a place to work because of the benefits offered.

10) Despite the generally positive picture, there is still work to do in meeting employees’ benefits needs, requirements and expectations.
At survey’s close, respondents were presented with this final open-ended question: “Aside from keeping costs as low as possible, what is the single most important thing your employer could do to help you in your benefits decision-making in the future?”

Six broad categories of suggestions emerged from the more than 1,300 comments received: more, better, detailed information that is regularly updated with clear pricing and disclosures and available 24/7; more choices and options between plans, carriers, range of benefits and payment schemes; reduce or control costs; more support for decision-making, online and print tools, group meetings, one-on-one counseling, more time to decide with continual education; simply process with more automation and less paper work. A small representative sample of verbatim comments is also provided:

  • “Provide print material comparisons of different plans and pros and cons of some of the different types of coverage.”
  • “Offer clear, concise information about each provider.”
  • “Stop changing carriers and plans from year to year — it’s confusing.”
  • “Information online, easy to get to, without having to contact HR over and over again.”
  • “Having more professionals to give me knowledge on the plans and explain in depth the details so I will know what is best for me.”
  • “Keep me updated on changes through emails and links to newsletters.”
  • “Offer better packages. More medical choices. They are pushing HSA plans that really suck.”
  • “Streamline the enrollment process so we don’t have to log into so many separate company websites to see our coverages.”
  • “My employer could provide a one-hour in-office insurance expert to discuss health benefits — that would be extremely helpful.”

The research team interpreted these results, coupled with the study’s other overall outcomes, to mean that employees, while not unhappy with the information, tools, and resources available to them, still want more — more information, more choice, more efforts to control benefits-related costs, more tools, resources and opportunities to lean, and more efforts to streamline the enrollment process.

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