The Guardian Life Insurance Company of America released a new report, “Closing The Gap,” that addresses the “low employee benefits IQ of working Americans” and suggests how their lack of knowledge may impair financial wellness.
According to the report, 80% of Americans believe they understand their benefits very well, but only about half demonstrate they actually do by making what Guardian deems to be optimal benefits-related decisions. Responding to a 10-question quiz about benefits coverage and terminology, individuals averaged a score of 72—a “C” grade. One in five received an “F” grade.
Somewhat encouraging, only one in 10 “early Boomers” received a failing grade, compared with one in four Millennials. One in four employees overall admit making benefit selections is more of a guessing game than an educated decision.
The results of the quiz revealed that employees are better informed about basic medical insurance compared to other supplemental health benefits that can be equally important, such as critical illness, along with disability insurance. Many workers also encounter problems with commonly used insurance terms such as “guaranteed issue” and “portability.”
“This raises questions about how well employees understand what they are signing up for during the benefits selection process,” Guardian warns. “Only 47% of working Americans feel their employer is doing a good job educating them about how to use their benefits—a significant drop from 66% in 2014.”
Dave Mahder, vice president and chief marketing officer of Group and Worksite Markets, adds that in today’s benefits marketplace, “more choice requires more effective benefits communication and decision-support tools that meet the needs of increasingly diverse groups.”
“It is critical for all employees, and notably millennials, to fully grasp how benefits like medical, supplemental health and disability insurance can work together to provide the financial protection they need,” he concludes. “An effective benefits enrollment experience adds significant value for working Americans, as well as their employers.”
Concrete suggestions from Guardian coming out of the report include utilizing clearer, consumer-friendly language as much as possible—especially when talking about potentially complex changes to benefits. Expert guidance to answer questions and validate choices can be invaluable, as well, especially when paired with online tools or interactive media to support learning and decisions.
A full copy of the study can be downloaded here.