Benefits Products & Services

Putting the buyer in charge

The potential payoffs and penalties of benefits communication

By Thomas A. McCoy, CLU

A salesperson once told me that at the beginning of his career, about 10 years ago, he had a client who had what seemed to be a peculiar quirk. This buyer would not accept calls from salespeople who called him from a cell phone.

It was puzzling to the young person, a recent college graduate selling television advertising, who was understandably hooked on using cell phone technology. He learned that the buyer's preference had little to do with weaknesses in the cell technology of that day. This buyer just considered the cell phone environment—whether from a car, a parking lot or wherever—to be distracting for both parties. He felt business should be conducted from behind a desk, as he was doing. It was a matter of respect to him.

The client was located two time zones away, and there were times when the salesperson's need to reach him came up rather suddenly. Nevertheless, he conformed to the buyer's wishes, placing his calls from his own office. He had to. It was a good account.

Employee benefits brokers and their insurance company partners have two separate constituencies of buyers—the plan sponsor and the plan participants. How do these buyers want to be contacted and educated about the benefits menu? What are the rewards for understanding these buyer preferences and delivering benefits choices accordingly?

Major insurers are paying particular attention to how they communicate with employees, since the voluntary market is thriving. Their successes or failures can be measured at the time of enrollment. According to recent research commissioned by Guardian Life, there is a direct correlation between an employee's benefits enrollment experience and the perceived value of the employer's benefits program.

The research consisted of two independent studies carried out in April and May of 2012—one of more than 1,000 employers, the other of more than 1,600 plan participants. It found that whereas less than half of all employees say they are "very satisfied" with their employer's benefits package, that number rises above 70% for those who are confident in their benefits selections.

Imagine that. You don't have to have a top-tier, employer-paid benefits program to get a "highly satisfied" rating from almost three quarters of your workforce. But you do have to communicate effectively to plan participants about the benefits you provide.

Further, Guardian's research indicates that 70% of employees who receive benefits information in their preferred channel are "very confident" in their benefits selections. That number drops to 57% for those who do not get benefits information in their preferred channel.

In general, Guardian found, employees prefer multiple channels. Their six top choices for receiving benefits communications were: e-mail, either at home or work (40%); mail, at home or work (36%); one-on-one meetings during the work day (28%); online non-interactive presentation (25%); group meetings or seminars during the work day (24%); video, CD-ROM or DVD presentation (19%).

For actual enrollment, the preferences were heavily skewed toward online options (80%). Paper/mail-in was second (13%); via phone with an insurance company representative was third (7%).

Employers, as well as employees, can recognize the flaws in the way some benefits programs are communicated. In the Guardian research, only 37% of employers ranked their benefits communications as very effective in helping employees make the right benefits decisions. Among employees, only 34% rated the benefits communications they receive as very effective.

"Employee benefits are not the easiest to understand to begin with, and as health care continues to evolve with employees needing to take a greater role in the decision-making process, the right education and communication is critical," says Elena Wu, vice president, group marketing and learning services at Guardian. "As we gear up for the annual open enrollment period, it is important for employers to realize that the benefits selection process must be top-notch, and communicated effectively, in order to ensure the highest employee satisfaction possible."

In December 2011, Unum commissioned its fourth annual independent study of American workers. It included an examination of the link between employee morale and the benefits plan information provided to plan participants. In the online study of 1,100 employed adults, conducted by Harris Interactive, 28% of employees said the benefits education in the past year by their employers was fair or poor.

The study results showed the consequences that come with a company's track record in providing benefits education. Of those who rated their benefits education as fair or poor, only 27% said their employer was an excellent or very good place to work. Conversely, 82% of employees who rated their benefits education highly scored their employer as an excellent or very good place to work.

"Our research shows that a good benefits education experience is a highly effective, low-cost way for employers to demonstrate their concern for employees and their well-being," says Barbara Nash, vice president of corporate research at Unum.

In the Unum study, results for the 2011 benefits enrollment period indicate a shift in some of the channels of communication used by plan providers between 2008 and 2011: 50% of employees received printed information or brochures, down from 70% in 2008; just over one-third of participants were offered a chance to attend an information/Q&A session about benefits, down from 52% in 2008; and employee access to a toll-free number to speak with a benefits advisor dropped to 29% from 47% in 2008.

Aflac recently released its 2012 WorkForces Report, another independently conducted online study that measures worker attitudes about their benefits program. Among its conclusions: 89% of employees say they simply elect the same benefits options every year; and half of employees would feel more informed about health insurance choices if they sat down with an insurance consultant during enrollment.

"Workers want to understand their insurance options, but many don't believe they have the information or the tools they need," says Audrey Boone Tillman, executive vice president of corporate services at Aflac. "Open enrollment is a crucial time for employers to help workers make smart choices about their physical and financial health."

Aflac suggests that employers educate their employees using a mix of online benefits portals, agent/broker enrollment sessions, employee newsletters, lunch-and-learn sessions, customized benefits booklets, and frequently asked questions.

Whatever tools are used to communicate benefits features and choices to employees, the employee's needs and preferences should be paramount.