When annual enrollment time for employer-sponsored insurance plans comes around, it can be difficult to drum up much interest by employees in evaluating their insurance plans and making adjustments.
According to a survey by MetLife, often employees aren’t all that excited by the prospect of annual benefits enrollment.
“In fact, their annual encounter with the often complex and sometimes unfamiliar world of employee benefits can feel like too much work,” the MedLife survey said. “So, it’s not surprising that many employees are not engaged in the annual enrollment process, simply rolling over their previous selections without review or failing to participate at all.”
The survey showed that, on average, employees spend only 20 minutes considering their annual benefit enrollment.
“Simply stated, employees will consider changes only if they understand the advantages or consequences of a change,” said Ronnie Tubertini, president and CEO, SouthGroup Insurance & Financial Services. “Unfortunately, all employees don’t always understand their coverage or their options. Employees at most businesses offering employee benefits should be receiving a briefing each year regarding options for both employer paid and payroll deductible voluntary benefits. Some companies accomplish this at annual health or benefits fairs and others simply utilize the services offered by their agent to meet with employees.”
Real employee engagement can be difficult regardless of the subject. But Tubertini said it really helps to create an event or environment in which employees can be educated about their options.
There are key life moments that should be taken into consideration when making insurance choices. Tubertini said the most obvious may be change in employment but, outside of that, some of those events would include marriage, death of a spouse or divorce, the birth of children and children becoming of an age to have their own insurance, or loss of coverage from another source.
Some employees make errors in judgment when making these kinds of decisions. A common issue is that younger employees, who are not yet thinking about retirement, many times don’t take advantage of employer matching retirement plans.
“These plans, such as 401K plans, can become very valuable if employees are thrifty enough to start young,” Tubertini said. “Other than that, probably the most common mistake is just not taking time to understand the benefits offered by their employer.”
Scott Bingham, executive vice president of Ross & Yerger Insurance, Inc., said the most common mistake he sees is employees not asking questions and for help during the open enrollment process.
“Many people get overwhelmed when asked to select benefits for themselves and their families because these decisions can be complicated, and it is often easier to elect the same coverage they had during the previous plan year,” Bingham said.
Bingham said it is easy to understand why people can fail to make the best decisions given the fact that this is often a once per year experience for them, and it takes a lot of time to understand and adequately select benefits.
“To make the enrollment process as smooth as possible, it is important that employers educate and communicate with their employees effectively,” Bingham said. “Employers should provide benefit information in an easy-to-understand format that provides employees with essential information, along with additional resources to help them make decisions.”
Another approach he has seen work well is to survey the employee population to determine their priorities — for example, product importance, preferred methods of communication and enrollment, etc.
“By doing so, employers can identify exactly what benefits their employees desire, and employees are empowered by decision-makers to contribute to the process,” Bingham said.
Factors such as age and retirement horizon may create an opportunity for employees to reassess their insurance needs. Bingham gives the example that as we get older, the amount of life insurance once needed to support a household may not be as great as it once was in a younger family.
“As that financial obligation lessens over time, life insurance amounts could be adjusted and those contributions redirected towards maximizing retirement plan withholdings,” Bingham said. “Obviously, marriage and birthadoption of children are very important moments across the spectrum of insurance offerings. The need for medical coverage is assumed in these situations, but appropriate planning to support a family in the event of death or disability also exists.”
Bingham said the most common mistake is simply failing to take advantage of an employer offered pre-tax benefit, such as a Flexible Spending Account/Arrangement (FSA).
“Though FSA participation may not be for everyone, the opportunity to plan for an upcoming scheduled procedure or annual budgeting for items such as cost-sharing copayments for maintenance medications, can be performed through these tax advantaged plans which provide an automatic return on the employees’ dollar,” Bingham said.
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