Colonial Life issued a White Paper last December which concluded that these assumptions may need, at the least, to be tweaked a bit. Based on research by Colonial Life, its parent Unum and other industry organizations, the White Paper stated, “Employees strongly indicate they want choice in their benefits, but offering an overwhelming number of options can have a negative impact on decision making.”

Colonial Life suggests in the White Paper that insurers should rethink their enrollment process, based on what retailers have learned about product choices. It quotes a 2011 TedTalk by Sheena Iyengar of Columbia University about choice overload, based on her research on retail products: “We have observed negative consequences to offering people more and more choices. They’re more likely to delay choosing—procrastinate even when it goes against their best self-interest.”

The White Paper also suggests that as important as technology is in communicating with employees about their benefits plan, it can be misused in ways that hurt participation and the overall success of a plan. For one thing, there is a big difference between the decision making process—how an employee considers the various choices offered and the cost—and the final selection, which is placing the x’s in the boxes. For the latter process, “The majority of employees are comfortable making their selections online via a Web portal.”

But to educate the employee about plan choices, the White Paper concludes that it can be counterproductive to rely too heavily on any one form of communication. Different generations have different preferences, and surprisingly, the study asserts, “Younger employees—often assumed to be most comfortable with a completely online process—may benefit most from personal assistance offered by one-to-one benefits counseling sessions.”

Throughout its 75-year history, Colonial Life has relied heavily on the use of trained employee benefits counselors to educate employees about their product choices. Technology and the explosive growth of the voluntary market haven’t dimmed the effectiveness of this approach, Colonial Life maintains.

“Last year was the best sales year in our history,” says Richard Shaffer, Vice President, Enrollment Center, Colonial Life and Unum US. “Our results reinforce the interest that employees have in our products, and almost all of this business was delivered through private counseling sessions. While some people in the marketplace don’t think that employers want their employees to sit down with counselors to discuss their benefits, that certainly hasn’t been true for us.”

Those who fit the term benefits “counselors” for Colonial Life number in the thousands, Shaffer says, including a nationwide network of 10,000 contracted sales representatives who work directly with employers and with independent brokers. For many brokers, he says, Colonial Life’s benefits counselors—along with the company’s home office enrollment support teams—serve as an extension of the brokers’ reach, giving them access to counseling resources they wouldn’t otherwise have, such as Spanish language assistance and call centers with extended hours.

In support of the company’s use of benefits counselors, the White Paper first points to evidence that having personalized benefits can increase employees’ loyalty to their employer. The White Paper then questions whether prevailing methods of benefits education used throughout much of the industry are enabling consumers to personalize their benefits effectively.

It points to evidence from a 2013 Unum study showing that older employees value written communication from their employers, whereas younger employees like to do their research independently, seeking advice from peers or online. Yet 81% of employers use the same communication strategies for all employees.

It cites a 2014 LIMRA survey showing that email is the method most frequently used by employers to communicate benefits information to employees. Next most common are information delivered to home or work and mandatory group meetings. However, the White Paper notes that according to a 2014 MetLife enrollment study, only 43% of firms with fewer than 500 employees provide one-on-one benefits counseling, even though a majority of employers and employees consider it to be effective.

“Employees rely on a number of mental shortcuts when making their benefits product choices,” the White Paper states. “These shortcuts can include a consumer’s ‘gut’ feeling about a product, the opinions or actions of a trusted friend or coworker, or a rushed decision without proper information.” For an employer, the White Paper cautions, this means that “simply providing information-rich product details and a mechanism to sign up may not be the most effective path to a successful enrollment.”

Based on the behavioral economic principles drawn from retailers, and the industry data included in the White Paper, it offers the following suggestions for improving enrollment:

• Employers can encourage participation by informing employees about the number of their coworkers who have enrolled and what benefits others are choosing.
• “Nudging” employees to make an active choice on each benefit option encourages them to become better educated about their needs and options to meet them.
• Three weeks is the optimal time frame for employees to adequately review benefit materials and make good decisions for enrollment.

“For most Americans, their employer’s benefits menu is the only place they will have access to the kinds of critical financial protection that a plan can provide,” says Shaffer. “The employer and the insurer have a responsibility to design appropriate options and present them in a way that helps employees overcome inertia, underestimation of risk and all the distractions of life that get in the way of making good decisions.

“For Colonial Life,” Shaffer continues, “our primary value proposition is the lifetime value of a counseling session—the employee sitting with a benefits counselor for 20 minutes and talking not just about the benefits we offer, but almost always including all of an employee’s benefits—medical, dental, vision, critical illness, accident, income protection, and so on. That allows the counselor to do an upfront assessment of the kinds of expenses the person has, marital and family status, what kind of savings the person has. This enables the counselor to begin to make recommendations tailored to the employee’s individual situation.”

Shaffer says that having its counselors use this “holistic” approach to the benefits selection process “creates an emotion-based connection” which is missing when an employer elects to provide employees with all their benefits education online.

It also can help eliminate the product overload that contributes to inertia in the decision making process. As the White Paper points out, “The reason enrolling with a benefits counselor is so effective is they can automatically remove unnecessary options or make suggestions based on an employee’s income or lifestyle. These elements have not been built into most self-enrollment portals.”

The White Paper probes the ways that technology can be used effectively to help employees understand their benefits better—“enhancing, rather than replacing, one-on-one sessions in situations where employees can meet with a benefits counselor.” It notes, “Many insurance brokers and benefits carriers offer their own proprietary enrollment systems, in addition to some systems employers have adopted themselves. However, employers can still create a seamless enrollment experience for workers by seeking out a benefits provider with the capability to integrate multiple systems through third-party connections.”

“Benefits counseling and online enrollment systems are not mutually exclusive,” Shaffer emphasizes. “Even small and medium-sized employers are going to increase their use of technology. We have live service integration into a couple dozen technology enrollment platforms, and we expect that number to increase. We think there’s a lot of value for employees to use that technology to make their decisions within the context of all their benefits offerings.”

The return on investment for business owners whose employees are confident about their voluntary benefits choices is a more satisfied and loyal workforce, Shaffer says.

The author
Thomas A. McCoy, CLU, retired in 2013 as editor-in-chief of Rough Notes magazine.