Employers’ Biggest Open Enrollment Task: Convincing Employees to Care

Despite the importance of open enrollment, employees aren’t exactly thrilled about reviewing forms for health insurance and other benefits every fall.

Nearly 7 in 10 benefits-eligible employees (67%) spend just 30 minutes or less reviewing their options during open enrollment, while 42% spend 20 minutes or less, according to a 2023 Voya Financial survey. And the overwhelming majority of employees (roughly 90%) choose the same options as they did the previous year, a report by insurance firm Aflac found.

Choosing benefits is “extremely overwhelming for people,” said Christin Kuretich, vice president of supplemental products at Voya, a New York City-based financial and insurance firm. “It’s not something that people generally want to think about or take the time to focus on.”

It’s an age-old problem, but this year adds another complication: Employees are now willing to spend less money on their benefits at a time when costs are increasing. The new monthly median amount that consumers will spend on benefits in 2024—excluding retirement savings—is $120, down $30 from the previous two years, according to LIMRA, an insurance industry trade association based in Windsor, Conn.

Although the LIMRA data doesn’t spell out exactly which benefits employees might cut or reduce, Kimberly Landry, associate research director for workplace benefits research at LIMRA, said she expects workers to “target the benefits they think they’re least likely to use, which means ancillary products such as disability insurance, supplemental health plans, and other voluntary benefits.”

It’s not that employees don’t care about benefits—they mostly feel overwhelmed, confused, and now cost-conscious, industry experts said. That’s where employers come in, as many have been falling short with their important task of communication.

“Educating employees on the importance of open enrollment is always a challenge,” said Jess Gillespie, head of product and underwriting at Prudential Group Insurance. “HR departments can be stretched thin and will sometimes lack the time and resources to communicate about all workplace benefits available, let alone noncore products such as supplemental health.”

In short, Gillespie said, employers “need to ensure employees see the value” of benefits.

Beefing Up Education Through Stories

To remedy the situation, experts said, significantly improved education and communication is needed. That can come in a variety of forms, from storytelling and having conversations about cost to utilizing multiple methods of communication.

Only 54% of employees in LIMRA’s survey said their employer communicates well about benefits.

“Employees need education, not just information, about what benefits are available and which ones they’d be best suited to use,” said Bridget Lipezker, vice president, worksite member operations at Optavise, a Carmel, Ind.-based benefits administration firm. “Otherwise, employees will not fully recognize or appreciate the benefits they have access to as part of their employer-sponsored benefits package.”

Education may be even more vital for younger workers. Voya research, for instance, found that Generation Z employees—many of whom have recently entered the workforce and presumably have minimal historical knowledge of their workplace benefits opportunities—reported even lower engagement in reviewing their benefits information compared to other generations. A majority (79%) of Gen Z benefits-eligible employees spend 30 minutes or less reviewing their workplace benefits information during open enrollment, a higher share than among Millennials (68%), Gen Xers (65%), and Baby Boomers (63%).

Storytelling is key, Kuretich said, and something that employers can do better to help employees understand how benefits can make a difference.

“Connecting the stories and examples can really have an impact, because some people are more convinced when they hear about a real-life situation that happened to a person they can actually relate to,” she said. “That’s going to be a lot more impactful than a generic stock photo with a list of benefits.”

HR teams can provide examples of employees who have used the benefits and seen a difference in their lives, if the employee is willing to share their experience, Kuretich said.

“Something as simple as that would make a really big impact in trying to help employees understand, and quite frankly, care about their benefits,” she said.

Reaching employees in a variety of different ways—from online to printed documents—is also crucial. Employees have different needs and different preferences, so a variety of methods to reach them about their benefits will only help, experts said. Virtual benefits fairs are one option to inform employees about available benefits options, while mailing information about benefits to employees’ homes—so other family members can look through it—is another.

If HR teams are stretched too thin, Gillespie recommends looking at outside sources to help.

“Implementing a decision support tool like Nayya or Enrollify can help with employee education. This takes the burden off small HR teams on explaining benefits packages and helping to customize for their employees,” she said. “Employers can lean on their carriers and benefits administrators to support their communication strategies.”

Conversations About Cost

Explaining benefits in terms of dollars and cents is also essential. That’s important every year, but especially this year as employees plan to tighten their benefits budgets.

Major drivers for the decline in employees’ benefit spend include inflation and tighter household budgets, LIMRA found. In particular, medical insurance premiums continue to increase significantly year over year, and these already eat up a majority of workers’ benefit budgets, Landry explained.

That decision will likely leave employees underinsured and susceptible to financial issues, experts said.

“If employees choose to spend less, they could wind up opting out of benefits they might need in the future, leaving them financially vulnerable if they experience a disability or serious health event,” Landry warned.

Employers need to explain how coverage can help employes and actually save them a great deal of money in the long run, if necessary.

“When employees decline certain benefits to stretch dollars, it makes them vulnerable if they face a critical illness or injury without comprehensive benefits,” Lipezker said.

Year-Round Education Is Crucial

Even though open enrollment is the most common time to communicate about benefits, the best strategy is to ensure that such communication happens year-round, experts said.

Doing so will ensure that employees have a better understanding of their offerings when they need them, and also ensure that they understand them in time for open enrollment. Sending information about benefits just once a year will likely not improve workers’ knowledge.

“Through consistent, easy-to-understand communication touchpoints, benefits will be top of mind for employees, they will understand the purpose and value of benefits, and they’ll remember to actually use them, such as submitting an accident claim,” Gillespie said.

Kuretich agreed.

“Employers have a great opportunity to talk about this stuff year-round, and not focus on it all in this little micro enrollment period,” she said. “Instead, they should make benefits part of the regular conversation.”