FEB 13, 2015 | BY RICHARD SHAFFER
Insurance carriers today realize that benefits enrollment can be significantly enhanced through the use of innovative approaches that incorporate new technologies. Particularly when it comes to enrolling in voluntary benefits, providers now understand that participation rates and consumer engagement can be greatly improved by applying key principles of consumer behavior and psychology to the enrollment process.
What’s driving the market?
Currently, economic and financial pressures in the U.S. are creating stress for employees across companies of all sizes. It’s clear that American workers have never been at greater risk. Consider that almost 70 percent of employees have no income protection, according to the Consumer Federation of America (CFA), and that 76 percent of consumers live paycheck to paycheck.
In addition, a 2013 Retirement Confidence Survey showed that half of all households could not raise $2,000 within a month if they needed to. And with the average medical deductible now more than $1,000, according to the Kaiser Family Foundation’s 2013 Employer Health Benefits Survey, employees need to be careful about how they will spend their benefits dollars to protect themselves and those they love.
Unfortunately, decisions about insurance and financial products are among the most difficult for consumers, according to a 2008 study by Yale University. With so many benefits choices available to them, many employees are simply overwhelmed. In addition, many lack the necessary information needed for informed decision-making and don’t know where to turn.
The good news is that the workplace is a powerful distribution channel that, when used effectively, can be the “go to” source for all employee insurance purchases. In fact, according to Gen Re, 90 percent of long-term disability coverage is currently purchased at the workplace, and according to LIMRA’s 2014 Insurance Barometer Study, 78 percent of life insurance is also purchased at the workplace. For almost all of us, the workplace is the only place to access benefits and benefits information.
Helping employees make the right decisions
With companies increasingly shifting coverage decisions and costs to employees, employers are tasked with providing benefits and enrollment methods that resonate with their workforce. Fortunately, insurance carriers are committed to helping employers present information so that enrollment options are clear and simple.
Working together, providers and employers can become “choice architects” who recognize that consumer decisions greatly depend on how information and benefit choices are presented. These choice architects use key principles of how consumers learn and decide to help employees make the benefits choices that are right for them and their families, often overcoming our very human tendency to underestimate our own risk.
For example, we understand that presenting too many options can overwhelm employees and lead to decision paralysis. When confronted with too many options, workers often don’t know what they really need or where to start. Studies on buying behaviors suggest that if employees are offered just four or five benefits at a time, they can make decisions without being overwhelmed.
Choice architects also realize that a workforce is not a homogeneous whole and that participation rates vary widely, even within a single population. An enrollment analysis can show graphically which employees enroll in particular benefits based on variables such as age, income, gender and work location. Such a “heat map” offers employers feedback about how effectively they are structuring and presenting benefits choices and where they can make improvements tailored to their workforce.
These heat maps often point out locations or line managers where employees may not be given the time to meet with benefits counselors or learn and enroll in available programs.
A common misperception is that employees don’t want help in choosing benefits and will disregard recommendations from their employers. However, surveys have shown that employees trust their employer to present voluntary benefits that would be meaningful for them, and depend on their employer for benefits information.
Auto enrollment, in which employees are defaulted into coverage — most commonly income protection — but can opt out, is becoming an accepted enrollment method. In fact, in a 2013 survey conducted by Unum and the CFA, 85 percent of those surveyed agreed that employers should automatically enroll new employees in disability insurance, allowing them to opt out of this coverage if they did not want it.
Another strategy that can positively affect enrollment rates is for employers to require an “active choice,” in which employees are required to learn about the insurance benefits being offered and then to either accept or decline each benefit. Active choice encourages employee engagement, and often more than doubles participation rates when used consistently. Employers should feel confident enough in the value of the benefits they offer to at least ask employees to pause and consider whether each benefit fits them or not.
Advancements in technology
Employers are increasingly adopting technology to reduce their administrative burden, increase accuracy, comply with the Patient Protection and Affordable Care Act, and offer employees the help they need online to streamline the enrollment process. From proprietary standalone enrollment systems to enrollment occurring in host systems, to the use of deep web services between carriers and an employer’s existing system, employers of all sizes have a range of options to make the process easier for their employees.
It’s often best to ensure employees can enroll within an existing technology platform so they can make all benefit decisions in context. Some providers can push their rates, underwriting rules and benefits options to an employer’s technology platform, while making the process seamless for employees.
And following enrollment, some carriers go beyond simply mailing a recap of the purchase to personally thank employees and reinforce that their decision was right and financially sound. Evolving technology is not only continuing to simplify enrollment, but is also enabling employers to interact more effectively with their employees at enrollment time through improved – and more personal – communication.
The personal touch matters
Despite advances in enrollment technology, employers should realize that just offering online self-service, good pre-communication and live consumer assistance probably won’t ensure optimal understanding or participation. Experience has shown that many employees are reluctant to simply go online and select benefits to buy, especially if they have questions or need additional information.
More importantly, many workers today often underestimate the likelihood of being unable to work due to serious illness or disability, so they still need to be reminded about how important financial protection is for employees at all levels of the organization. Education and an explanation of what the benefits cover and how much they cost can go a long way in helping employees determine what best fits their budget and can encourage them to purchase the coverage they need.
While technology is crucial for today’s enrollment scenarios, research shows that employees need and want advice and recommendations about the right benefits for their family, and prefer to ask questions of a live person. Consequently, the most effective enrollment combines high tech with high touch approaches. Employers should not underestimate the value of a face-to-face counseling session or a session delivered via call center, even in combination with online enrollment.
Making benefit counselors available in an online enrollment world might include access to a live chat, offering call center support, co-browsing with a counselor, or accessing a video conference call to interact with a trained benefits counselor. This dual approach to purchasing benefits at the worksite provides the best of what technology has to offer, along with the personal touch that employees want.
With today’s available technology options and knowledge about consumer purchasing decisions, employers have the tools they need to ensure optimal enrollment results and support employees at the workplace, for most of us the only place to access affordable financial protection benefits.