Expanding the Benefits Horizon: Employee Understanding, Enrollment, and Financial Vulnerability

Summary

As interest in voluntary benefits continues to grow, understanding how employees perceive, evaluate, and use these offerings is increasingly important. To deepen understanding of the employer-provided voluntary benefits landscape, EBRI partnered with Lincoln Financial to field a three-part research program, Benefits in Focus: Supplemental Health, Dental, and Vision Perspectives. This Issue Brief is the third installment in the series and presents findings from the employee survey, which captured the views of 1,130 benefits-eligible workers on benefit availability, understanding, enrollment decisions, experiences with medical expenses, and interest in voluntary options.

Some of the key findings from the survey include:

• Employee understanding and perceptions of affordability are key constraints to the adoption of voluntary benefits. Employee self-rated understanding was weakest for many supplemental health products (40 percent had a high understanding of critical illness; 35 percent for hospital indemnity). While awareness was stronger for core benefits, there is still significant room for improvement (54 percent had a high understanding of health insurance; 53 percent for retirement). Employees who chose not to enroll in voluntary benefits were most likely to cite cost as a barrier, but they may not have considered that the incremental cost for voluntary benefits could help them save a large sum in out-of-pocket expenses in case of a medical event.
• Clear, accessible information delivered in plain language can have a meaningful influence on employees' interest in voluntary benefits. When respondents were shown a series of brief, plain-language statements describing specific voluntary benefits, interest in enrolling in them rose markedly. While these results do not guarantee enrollment, they do show the impact of effective language in making employees more interested in voluntary benefits.
• Gaps in access to benefits education, particularly among workers at companies with fewer than 500 employees, may play a role in benefits understanding. Employees working for organizations with fewer than 500 workers reported lower levels of access to benefits information across multiple communication vehicles — especially through email, websites, smartphone apps/notifications, and social media.
• Unexpected medical expenses are common, yet financial preparedness is limited. Nearly half of employees said they or a family member had an accident or injury requiring medical care in the past five years, while 39 percent reported a hospitalization in the past five years. Only 34 percent of employees said they were very prepared for a $500 expense, 28 percent for $1,000, and 21 percent for $5,000. Nearly half (47 percent) reported at least moderate financial difficulty due to medical events; 37 percent had a medical bill sent to collections.
• Medical costs are a frequent, near-term cash-flow event and a common cause of financial strain. Twenty-eight percent of employees experienced three or more medical events costing more than $500 in the past five years, and among those with a recent event, 53 percent paid at least $1,000 out of pocket. Forty-two percent typically paid routine medical expenses in full at the point of care, 42 percent paid after receiving a bill, 27 percent set up payment plans, and 20 percent used credit cards.
• Decisions to delay medical care are often cost driven and can have lasting consequences. Fifty-seven percent of employees have delayed their medical care; 26 percent have delayed within the past year alone. External research shows that delayed care can result in higher treatment costs, increased absences, lower productivity, and conditions becoming more severe. Costs are a major factor in delaying care, with just under six in 10 employees citing this as the main reason they postponed medical care.
• Burnout is common and linked to more frequent medical events, higher medical costs, financial difficulties, and worsened mental health compared with workers without burnout symptoms. Fifty-six percent of employees had at least one symptom of burnout (defined as “feelings of energy depletion or exhaustion, increased mental distance from one’s job, feelings of negativity and cynicism”). Those experiencing burnout symptoms reported experiencing more medical events requiring at least $500 in out-of-pocket costs as well as higher levels of financial difficulties because of these events. Fifty-four percent of employees with burnout symptoms reported “moderate” to “severe” levels of financial difficulty, compared with only 3 percent of employees without burnout symptoms. Burned-out employees were also less likely to rate their mental health highly compared with their colleagues.
• Many employees enrolled in supplemental health benefits anticipate negative consequences if coverage were unavailable. More than half (57 percent) of supplemental health enrollees described accident, critical illness, and hospital indemnity insurance as “very important,” and many expected they would face difficulties if coverage were not available — including greater worry; reduced productivity; increased absences; and a greater likelihood of needing loans, income advances, or retirement savings to cover unexpected medical expenses.
  • Dental and vision benefits are widely offered and highly used, while fewer employees are aware of access to supplemental health benefits. Health insurance (85 percent), retirement plans (69 percent), dental (68 percent), vision (59 percent), and life insurance (54 percent) were the most reported employer offerings, and enrollment among those offered was high. Far fewer employees reported supplemental health benefits being available to them in the workplace — 28 percent said they’re offered accident insurance, 21 percent were offered critical illness, and 17 percent were offered hospital indemnity. Despite limited availability, reported participation rates among employees who were aware they had access to supplemental health are promising.
• Some employees obtain core benefits outside the workplace, including life, dental, and vision. Twenty-five percent of employees reported buying dental insurance, and 21 percent buying vision insurance, outside of work; 32 percent purchased life insurance independently. Smaller shares reported buying supplemental health protections on their own (e.g., 14 percent for accident, 8 percent for hospital indemnity).