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2013 Benefits Special Report

Era of choices creates

Aflac and Colonial Life surveys identify need for better employer-employee benefits communication

By Len Strazewski

If employers expect to continue to use their employee benefit programs to help recruit and retain top employees, they had better pay more attention to benefit communication, say two of the largest voluntary benefit providers.

The implementation of Patient Protection and Affordable Care Act provisions next year only complicates employer concerns and creates a greater demand for clear and concise information, adds Michael Zuna, executive vice president and chief marketing officer of Aflac in Columbus, Georgia. "When you think about the impact of the Affordable Care Act, you realize so much of the prior changes in benefits were driven by rising costs. Employers for many years were in the position of managing those costs as well as maintaining a strong workforce."

However, the Affordable Care Act now creates a risk shift from employer to employee, as workers grapple with the increased responsibility of the health insurance mandate and the need to make more choices about their health plan and other benefits. They will expect more guidance from their employers about how to navigate those choices and will need more support from their agents and brokers, Zuna says.

"This could be an exciting period of time for producers. There is so much uncertainty and so much need for information and guidance that employers will need to rely upon their trusted agents, brokers and consultants to help them navigate the sea of changes" and provide better education and communications for their employees. 

Zuna also anticipates a dramatic increase in interest in voluntary benefits as employees seek to fill gaps in their health and disability benefits that may be created by the new law. He says the law is likely to drive employers to provide more options that their employees can use to protect their income and assets from uninsured losses and protect themselves from unexpected medical expenses not covered by new minimum health plan designs.

Zuna notes that for the third year in a row, the Aflac WorkForces Report confirms that employee benefits are an important influence on employee loyalty, productivity and retention. The 2013 Aflac WorkForces Report is derived from an online survey of nearly 1,900 benefits decision makers and more than 5,200 workers. The survey was conducted in January by the Plano, Texas-based polling organization Research Now.

It revealed that nearly three-fourths (74%) of employees are extremely or very satisfied with their job when they are similarly satisfied with their benefits and that 69% of those who are not satisfied with their benefits say improvements would entice them to stay with their employer.

About 59% say they would accept a job offer with a slightly lower compensation but better benefits.

However, the survey revealed many significant knowledge gaps among employers and employees related to the Affordable Care Act changes and employee benefits in general. Among the general employee benefits findings:

—About 89% of employees admit they choose the same benefits options every year.

—About 72% of respondents have not heard the term "consumer-driven health care," but more than half (53%) of employees say they have implemented a high deductible health plan in the past three years.

—About three-fourths (76%) of workers are not very or not at all knowledgeable about Health Savings Accounts (HSAs).

—Nearly half (49%) are not very or not at all knowledgeable about Health Reimbursement Accounts (HRAs).

—About 25% are not very or not at all knowledgeable about Flexible Spending Accounts (FSAs).

—More than half (54%) of workers would prefer not to have greater control over their insurance options because they don't have the time or knowledge to manage them.

Employees and employers also lack deep understanding of the Affordable Care Act and what it will demand of them. And they are not in agreement about where their education will come from.

—About 75% of employees said they think employers would educate them about changes to their health care coverage as a result of reform—but only 13% of employers said educating employees about reform was important to their organization.

—About 62% of employees believe the medical costs they will be responsible for will increase. But only 23% are saving money to pay for those increased costs.

—More than half of employees (55%) say they have done nothing to prepare for possible changes to the health care system. But about 53% of employees fear they may not be adequately covered.

Despite the employee concerns about their ability to understand and manage their benefits, employees are still attracted to voluntary benefits, and research indicates voluntary benefits also contribute to job satisfaction. 

—About 60% of employees say they are at least somewhat likely to purchase voluntary insurance plans if their employer offered them.

—About 60% of employees who are offered voluntary benefits said they are not likely to look for a new job, compared to 49% of employees who are not offered voluntary benefits.

A separate study by another large provider of voluntary benefits also points to the importance of benefit communications as a key factor in developing employee benefits value and supporting participation in voluntary benefits. Colonial Life and Accident Insurance Co. in Columbia, South Carolina, a division of Unum, and Harris Interactive conducted the online study by surveying more than 2,000 adults 18 and over from February 27 to March 1 this year. They identified several benefits communications trends, including a few surprises.

About 73% of employees surveyed said understanding their benefits is very important. While most employers believe they are effectively communicating their benefit programs and their value to employees, few employees agree.

"Only 23% of employees think their employers communicate their benefits very effectively," says Steve Bygott, assistant vice president of marketing at Colonial Life. "Even more troubling is our finding that 9% of workers say the benefits communication is not at all effective."

However, the survey did point to some steps employers could take to improve their communication. 

—38% of respondents said employers could provide benefits information that they could access at home or at work.

—37% said employers could provide information that was easier to understand.

—34% asked to be able to talk to a benefits expert on company time.

—31% asked for information to be provided more frequently.

—30% asked for communications personalized to their needs.

"Benefits today account for more than 30% of employee compensation. But if employers are not effectively communicating their benefits, they are not getting the full value of their investment, Bygott says.  "For employers to get the most value from their benefits investment, they need to provide face-to-face, personal communication with their employees."

The author

Len Strazewski has been covering employee benefits issues for more than 30 years. He has an M.S. in Industrial Relations from Loyola University in Chicago.

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