Poll: Workers Misdiagnose Employer Health Coverage Expenses

February 28, 2005 (PLANSPONSOR.com) - Workers may understand that health coverage is expensive these days, but few have a realistic sense of how much that coverage is costing their employer, according to a new study.

A MetLife news release reporting the results of the MetLife 2004 Employee Benefits Trend Study said that more than one-quarter (28%) of full-time employees believe that their company spends less than $1,000 per employee annually on medical coverage. Just under half (49%) believe their company shells out less than $2,000 while only 27% of full-timers more accurately said their employer paid $4,000 or more per year.

(Nationally, companies spend an average of $7,289 per employee annually for family coverage and $3,137 for single coverage, according to the Kaiser Family Foundation and Health Research and Education Trust, MetLife said.)

Among various worker groups, divorced/separated employees and those in a domestic partnership were most likely to assess their employer’s contribution realistically with four in 10 (41%) and 44% of these employees respectively estimating their company’s investment at $3,000 or more per year, compared with 38% of employees overall.

If workers don’t know how much their company spends on their health coverage, it may not be their fault. Currently, only 31% of employees give their companies’ benefits communications program high marks. Roughly the same percentage (36%) give high marks to their companies’ benefits package, up only slightly from last year (32%).

“Rising healthcare premiums are having an impact on many companies’ bottom lines,” noted Beth Hirschhorn, chief marketing officer, MetLife, in the news release. “Yet far too many employers are not taking the time to educate their employees on the value of their investment, causing employees to underestimate the worth of their individual and family benefits.”

More than half (57%) of the full-time employees surveyed by MetLife, for example, report that they spend 30 minutes or less making benefits decisions during open enrollment. On average, employees spend 62 minutes making their enrollment decisions. The median is 30 minutes.

Currently, 60% of full-time employees (and 71% of those aged 21-30) don’t understand which benefits best meet their needs. To fill the gap, 27% of full-time employees overall (and 40% of those age 21 – 30) rely on friends and relatives for financial advice, while 46% don’t consult with anyone. Among older workers, 53% of employees age 51 – 60 and 56% of employees age 61 – 69 don’t consult with anyone.

More than a third (34%) of the full-time employees surveyed say they are interested in having their employer provide a wide array of voluntary benefits. Employees view the payroll deduction associated with voluntary benefits as a “convenient way to make payments” (62%) and as a means for becoming “more disciplined about saving” (51%). The ability to sign up for insurance without going through a medical exam is also a strong selling point for 50% of employees. In terms of buying patterns, young workers (25%) – in addition to African American (28%), Hispanic (25%) and Asian (20%) employees – are more likely than their peers to purchase their financial and protection products at work.

The MetLife Employee Benefits Trend Study was conducted during the third quarter of 2004 and consisted of two surveys. The employee survey, fielded by NOP World, polled 903 fulltime employees, age 21 and older, at companies with at least two employees, and 1,542 voting age consumers. The employer survey was conducted by TNS NFO and polled a total of 1,528 HR/Benefits executives from companies with at least two employees participated in the employer survey. MetLife.

The study findings are here .