Benefits Business

Benefits education takes on added importance

Employees need product guidance, and younger ones, especially, aren’t getting it

By Len Strazewski

According to new industry research, employee benefits education and communication are fast becoming the top jobs—and the best opportunity—for agents and brokers who are trying to build a larger and more diverse book of benefits business.

As employee benefits programs become more complicated—designed around tax-incented account structures, higher deductibles and optional products paid though payroll deduction—employers that sponsor the benefits are asking their agents and brokers to play a much greater role in educating their workforce and communicating the administration of benefits.

And as employers cut back their human resources departments, the producers that can provide year-round education and communica-tion services have an edge over competitors who can handle only annual renewals and enrollment periods.

The Workplace Benefits Association in Windsor, Connecticut, and LIMRA in Hartford, Connecticut, surveyed 230 benefits industry executives, including more than 100 active producers, for their joint study, “Worksite Marketing: An Insider’s View.” The survey report notes that respondents say that communication is critical to effective employee benefits marketing and that employers have come to expect that agents and brokers will do the “heavy lifting” of benefits education and communication.

While the study focused only on voluntary benefits, the trends probably apply just as well to all employee benefits, particularly as employers reduce their cash contributions and narrow the scope of the benefits they pay for and move more benefits—such as long-term disability, vision and dental care—to the voluntary programs.

About 98% of all respondents strongly agree or agree that communication directly with employees is key to selling voluntary benefits products; and among the active producers, employee communication is even more strongly supported.

“Marketing employee-pay-all insurance benefits adds an additional layer of complexity to the sales process,” the report states. “In order to reach their ultimate customer (employees), producers must first sell the virtues of the voluntary benefit(s) to those responsible for the company’s benefit package. This could be one person or a team; the business owner and/or a professional human resources staff.

“Regardless, worksite marketing success requires strict attention to clear communication. Industry professionals (especially producers) are very conscious of this need and overwhelmingly believe that customer communication is the key to successfully selling voluntary products. And while it is essential to reach both employers and employees, communicating with the ultimate purchaser takes priority,” the study says.

Most respondents also believe that employers are looking for help in communicating their benefit plans to employees. About 89% strongly agree or agree that employers welcome assistance in benefit communication as their plans become more complex and more likely to contain a mix of employer-paid and voluntary employee-paid benefits.

The active producer respondents are a bit less confident of this trend, however. Only 85% strongly agree or agree that employers want their help communicating the entire employee benefits program. But the study notes that the consensus of opinion is that bridging the understanding of employer-paid and employee-paid benefits is important to building new sales opportunities.

Communicating with employees isn’t easy, however, and the process is becoming increasingly more complex, not only as employee benefit plans evolve but also as the employee population changes—getting younger and possibly less interested in traditional means of education and communication.

From Baby Boomer to Generation Y to the newest generation of “Millennials,” each group has its own attitudes toward employee benefits communication and each group poses its own challenges.

A recent study by Harris Interactive that was commissioned by Unum in Chattanooga, Tennessee, indicates that Baby Boomers—the senior generation of employees that began to retire in force last year—have not educated their children or Gen Y—the more recent majority of the workforce—about employee benefits or their importance.

As a result, these younger workers may understand some of the basics of health and retirement plans that are reported in the general media, but less about the specifics of employer plans and very little about voluntary or supplemental benefits.

This study was conducted online within the United States from August 12 to August 14 last year (2008) among 1,353 adults age 18 years or older, 548 of whom are considered Generation Y (ages 18-30) and 805 of whom were Baby Boomers (ages 44-62). Of those, 363 Generation Y and 555 Baby Boomer respondents were employed full-time, part-time, or were self-employed.

According to the survey, 72% of Gen Y workers (ages 18-30) say their parents or another adult mentor has talked with them about saving money, and about 61% say their parents talked to them about job hunting. But just 30% of Gen Y workers have heard from a parent or adult mentor about choosing the workplace benefits that can help protect their health, income and financial stability.

“Parents and mentors have talked to Gen Y about the risks they face growing up, but they aren’t completing that process by talking about how they can protect themselves financially in young adulthood,” says Mike Simonds, senior vice president for Unum. “Until this new generation of workers understands the benefits decisions they will have to make, the talking isn’t done.

“Generation Y is entering a workplace in which benefits decisions and paying for some coverages are their responsibility,” Simonds says. “These young workers need to be prepared to make the decisions that will help protect their financial security, and this research shows that the generation made up largely of their parents—and bosses—isn’t preparing them.”

Simonds says the study also indicates that Gen Yers do not understand the connection between their benefits and their financial stability. While most understand traditional health insurance and retirement benefits somewhat, 43% are unfamiliar with supple-mental health coverage; 52% are unfamiliar with critical illness insurance; and 35% aren’t familiar with disability insurance.

And what of the next generation of workers who are presently in college but who are preparing to graduate into the worst economic recession since the 1980s? They may be an even more complicated and important benefits education and communication project for agents and brokers.

According to the National Association of Colleges and Employers (NACE) in Bethlehem, Pennsylvania, which provides job trend information to college job services and recruiters, the Millennials, as the new generation is called, will likely be more conservative than Gen Y and more focused on security in employment.

The NACE Graduating Student Survey asked those about to enter the workforce to rate on a scale of 1 to 10, the relative importance of employer attributes.

The employer attribute “has a good insurance package,” ranked third overall with a score of 9.20/10, behind “opportunity for advancement” and “job security” and ahead of “friendly co-workers,” “job location” and “high starting salary.”

As a result, communicating employee benefits may become critical if employers are going to meet their recruitment and retention goals over the next five to 10 years as Millennials move into the workforce in a big way. *

The author
Len Strazewski has been covering employee benefits issues for more than 20 years and is employee benefits editor of Human Resource Executive magazine. He has an M.A. in Industrial Relations from Loyola University.