How You're Wasting Insurance Money
CREDIT: Burning money image via Shutterstock
U.S. employees are costing themselves hundreds of dollars each year by making mistakes when selecting their insurance benefits, new research shows.
The study by Aflac revealed that 56 percent of employees estimate they waste up to $750 a year because of errors made with insurance benefits elections. The survey found that nearly a quarter of workers chose the wrong level of insurance coverage or benefits options they didn't need, while just 16 percent of employees felt confident they weren't making missteps during the enrollment process.
Some of the more common mistakes made, according to the survey, were not knowing the changes that were made to their policies each year, choosing too high of a deductible and not contributing the right amount to flexible spending accounts.
Overall, 89 percent of those polled simply elect the same benefit options every year.
Audrey Boone Tillman, executive vice president of Corporate Services at Aflac, said today's employees can't afford to be in the dark about benefit decisions.
"Consumers today need every dollar they have, with many clipping coupons and looking for ways to save," Tillman said. "It's critical that employees understand their benefits options during open enrollment to ensure that they don't make mistakes that cost them money."
While businesses believe they are adequately educating their workers about benefits options, the study shows employees disagree. Nearly two-thirds of the employees surveyed feel they are only somewhat prepared for open enrollment, with more than half of workers saying their company has not communicated with them at all about the benefit selection process.
Tillman said the study highlights a disconnect between how well companies are communicating benefits and how prepared workers feel to select the right options.
"Workers want to understand their insurance options, but many don't believe they have the information or the tools they need," she said. "Open enrollment is a crucial time for employers to help workers make smart choices about their physical and financial health."
Tillman recommends that businesses take a cue from successful marketing campaigns and consider how to communicate with employees about benefits in ways that will engage them. She offers several tips for employers, including:
- Choose the right products. Survey employees to determine what they need and want in order to offer the right mix of benefits options to meet their needs.
- Consider including more benefits options that don't have direct cost to the company by offering voluntary plans. The study showed that more than half of employees say they would be at least somewhat likely to apply for voluntary insurance plans if their employer offered them.
- Choose the right time to market benefits offerings to employees. Plan to reach employees when they're most receptive to learning about their options and how they can get the most for their money. The most innovative employers use a mix of online benefits portals, agent/broker enrollment sessions, employee newsletters, lunch-and-learn sessions, customized benefits booklets, frequently asked questions and other educational materials to help employees understand what's available and how each plan works.
The study was based on surveys of more than 2,000 full-time and 500 part-time employees.