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Employees Often Regret Their Benefits Choices. HR Can Fix That
As open enrollment season kicks off, employers are juggling a myriad of issues, including increasing health care costs, a dispersed workforce, evolving regulatory requirements, and rising employee expectations.
But one thing many HR leaders don't often think about is the fact that scores of employees have little confidence in their benefits choices. In fact, more than half of U.S. employees said they regretted their benefits choices in the previous year, according to 2024 data from Equitable, a financial services company.
That's a big problem, said Amy Mosher, chief people officer at Charlotte, N.C.-based software firm isolved. And it's one that negatively impacts both employees and employers — and could be even worse this year.
"From an employee engagement perspective and certainly from a retention perspective, it's very significant," she said.
So how do wrong benefits choices affect employees? How can HR remedy that issue? And how can emerging technologies play a role? SHRM spoke to Mosher for her insights.
Could the problem of benefits choice regret could be worse this year?
Mosher: Yes. Any year that you see unemployment rates increase instead of decrease, even for a period, that spikes awareness among most working Americans. They start thinking, "I need to be more aware of how I'm spending my money." That added stress definitely weighs on them when they're deciding what kind of benefit plans they want to participate in. They're trying not to overspend, but they're trying to make sure that they have enough coverage. In a world that is very confusing, sometimes they just say, "I'll choose the same thing I did last year."
Why are employees not making the right benefits selections, and what happens when they feel like they've made a bad choice?
Mosher: First of all, the benefits process is incredibly confusing. There are very few employees out there that feel very confident in their understanding of their benefits. Then, there's the cost aspect — it's incredibly expensive. A lot of employees don't really grasp what they're picking and what they're spending. Most employees find the benefits selection process extremely stressful.
When they realize, "Oh wow, I signed up for something I'm not using, I'm not feeling value in that," they think, "Well, clearly my employer didn't explain this well enough, or I feel like they don't care."
How can HR get employees to feel more confident about their decisions? More thoughtful help? Personalization?
Mosher: There's a huge issue with employers thinking that there's a one-size-fits-all. A lot of companies have a very structured plan design, and it leaves employees with this generic, and sometimes irrelevant, list of benefits, and they don't really have the guidance that they need to use and access them in an effective way, and also just to comprehend what it is that they have.
I don't feel like employers are communicating what's available from a total rewards perspective — or even defining what total rewards means. [For example,] there's a big demand for paid medical days, flexible schedules, wellness tools — some employees don't understand [that] that's part of their benefit package. It's not just all the confusing medical benefits.
What can help with that communication gap?
Mosher: Total reward statements are incredibly important from a best practice perspective. They can provide clarity about what's being offered and what it's worth for employees.
Also, don't wait until open enrollment. There should be a year-round internal marketing campaign [informing employees] what they have available from a total rewards and benefit perspective, from a well-being perspective — broken down into super digestible, accessible pieces. You should basically be micro-dosing them with information. It can be through videos, through webinars you have with your benefit providers, through Q&As, through infographics or polls, through surveys.
A lot of organizations … focus on new hires as to what they have available from a benefits perspective, and they're not doing a good enough job of arming leaders across the business with an understanding of what total rewards is so they can speak about it.
What's something you are doing with your employees for open enrollment this year to help guide them into good decisions?
Mosher: We use an AI-enabled tool that plugs into our [human capital management] system. It helps employees understand what their benefits are and how they utilize them, and how individuals with similar benefit needs utilize theirs. It makes AI-enabled recommendations. We implemented it last year. It had huge implications on the education [component], about what they were enrolling themselves into. It allowed them to spend less, only on what they really needed and wanted. And it allowed us to spend less because we're self-insured, so we only had to pay for what they elected.
It ended up personalizing the benefits enrollment experience for the employees through automation and technology. It was fascinating.
This article is courtesy of Society for Human Resource Management (SHRM)
