Health+Benefits Vital Signs the September 2023 issue

Employees Recoil from Benefits Review

Q&A with Sahang-Hee Hahn, Head of Strategy and Planning, Haven Life
By Tammy Worth Posted on August 30, 2023
Q
What kind of information are you trying to glean from the market with this survey?
A
This is a survey that we send out every year to get a better understanding of how full- and part-time employees view their insurance coverage as provided through their employer. We also want to understand the gap between employees’ needs for life insurance and the coverage that they actually obtain. In many cases, employer-provided life insurance coverage is not portable, and we’re obviously interested in making sure that the everyday American has sufficient life insurance coverage to protect their financial assets and the ones they love, not only while they’re with a specific employer but overall.
Q
Some of the questions this year dealt with open enrollment. The questions were funny but gave stark insight into how people feel about dealing with benefits, didn’t they?
A
I couldn’t help but chuckle a little bit over these questions. What we are finding is that few adults would put reviewing their insurance and benefits options in their top-20 list of fun things to do. For example, half of all respondents would rather let their spouse have total control of the remote over Thanksgiving than review their health insurance and benefits options in detail during open enrollment. Also, more than half would rather go in person to buy a flat-screen TV during Black Friday than review their benefits.
Q
That has to have some kind of impact on whether people are choosing benefits that are best for them.
A
Absolutely. Our survey said 31% of respondents admitted that they have somewhat or no understanding of the health insurance benefits that their company provides and 29% have somewhat or no understanding of their life insurance benefits. And 17% don’t know the difference between health and life insurance. That’s a fairly sizable percentage of folks who have not really dug into what their employer has spent a lot of time and money to provide to their employees. So I think it definitely shows that there’s a need there for education.
Q
There are probably more ways now than ever to educate employees about their benefits, though.
A
While I can’t speak for every employer, I think it’s fair to say that there has never been more access to digital tools, online calculators and other supporting resources to help employees educate themselves about employee benefits. I think that there’s general recognition across companies that we want to equip employees to become educated about their benefits. So there’s the awareness piece, knowing that information is there, but then also just the sense of ownership and interest about learning more that employees would need.
Half of all respondents would rather let their spouse have total control of the remote over Thanksgiving than review their health insurance and benefits options in detail during open enrollment.
Q
So, if employers have a range of educational tools and one third of people are uncertain how their benefits work, does it just come down to lack of interest on the part of the employees to understand their options?
A

There are probably a number of reasons why. I think one thing at the top of that list is probably time. Working professionals oftentimes wear multiple hats throughout our lives, and time is a precious commodity—time is the number-one nonrenewable resource from my perspective.

On top of the time, I would say it’s the complexity of the issue overall. When we are giving a benefit like life insurance, we’re really trying to enable employees to find adequate life insurance for their defined term period, if not their lifetime. So, for 10, 20 or 30 years a person could be with the same employer, but if they aren’t, what are they going to do then? And to what extent do they need to diagnose their need for life insurance, calculate that and then purchase additional life insurance to supplement an existing policy? We in the industry recognize that it’s important, but you can already see the level of complexity involved in making that coverage decision.

Q
There are a lot of nuances in both health and life insurance benefits. What would you say is one of the most important that people should understand but didn’t seem to from the survey?
A
Only 21% of respondents said that the life insurance benefits they subscribe to at work will not automatically end if they leave the company. That means it’s a portable benefit. That would suggest that four fifths of the respondents have nonportable life insurance, which means their life insurance coverage is tied to their being with that specific employer. Another 9% said their company offers it but they don’t know if they have subscribed to it or not, and 18% of respondents admitted they don’t even know if their company offers life insurance benefits. I was a little surprised by these results, to be perfectly honest, but the more I reflect on them, the more it makes sense. If anything, it just highlights the need for the work that we’re currently doing at Haven Life.
Q
You mention portability of life insurance. Do employers need to be thinking more about offering those kinds of plans?
A

I actually think, at the end of the day, the onus is on the employee. The reason for that is because it’s great to make suggestions for how employers should make change, but I believe an individual should take ownership over one’s own finances. As employees move from one employer to another, a driving factor in that decision is most likely not based upon whether or not that next employer has portable life insurance coverage. So employees need to be aware of their current benefits, where the gap is, and then figure out what additional life insurance coverage they might need.

For an employer, some provide baseline life insurance coverage and then allow people to purchase additional life insurance coverage beyond that to, in effect, supplement what is being offered at the company. That could be portable, but it really does vary between employers. I’m sure optionality is always attractive to employees. So, there’s an opportunity to do something like that—offer more choices, more opportunities to take ownership over one’s own financial journey.

Q
The survey also found that 14% of respondents didn’t know when their company’s open enrollment period begins. That’s a smaller number than people who don’t understand their benefits but must be concerning for employers.
A

I think this question is a little bit different from what we’ve discussed previously, because I think this arguably strays into the area of internal communications for a respective employer—whether or not that message is being conveyed. I can say that, at our company, that message is blasted. There’s a speculative component to this particular question, too, because we do not know if any of them received communications from their employers and, if so, what they did or did not do based upon that information.

But it’s safe to say that 14% are saying that either they’re not getting the message in the right way or they’re not getting it at all. In other words, there’s some kind of gap that employers could be thinking about and understanding that maybe they’re not doing the best job for all employees. That may just be certain people, certain groups, whatever, but there’s a gap there, for sure.I think this question is a little bit different from what we’ve discussed previously, because I think this arguably strays into the area of internal communications for a respective employer—whether or not that message is being conveyed. I can say that, at our company, that message is blasted. There’s a speculative component to this particular question, too, because we do not know if any of them received communications from their employers and, if so, what they did or did not do based upon that information.

But it’s safe to say that 14% are saying that either they’re not getting the message in the right way or they’re not getting it at all. In other words, there’s some kind of gap that employers could be thinking about and understanding that maybe they’re not doing the best job for all employees. That may just be certain people, certain groups, whatever, but there’s a gap there, for sure.

Q
The survey also found that employees are wanting robust life insurance benefits (25% want a life insurance payout that is three to five times their annual income) without paying out a lot to get them (40% of respondents said they expect to pay less than 10% of their salary for all of their benefits). What does that mean for employers as they think about what options to provide?
A
I actually took these questions in a slightly different way. I thought that this was quite encouraging information, as it effectively spells out the need for some types of term life insurance products that Haven Life currently sells and that there is cost or price sensitivity. Only about 20% felt that spending over 20% of their salary on benefits was fair. The remaining population wanted to pay less. At the same time, while paying less, they are looking for three to five times their salary in coverage. That’s the largest group, and the next largest wants an even larger amount—which is six to eight times their salary. So you’re talking somewhere between three times to eight times coverage for a little less than half of that total population. That says to me loud and clear that there is a need for term life insurance products, because they are intended to address exactly this audience.
Q
With this combination of price sensitivity and expectation of payout, should employers be planning to put a little more skin in the game when it comes to life insurance coverage in the future?
A
I can’t speak to employers and what life insurance offerings they have currently available and whether or not they should make changes. All I can say is that term life insurance can be an attractive option for employees who fit within these parameters. Other types of life insurance coverage might not provide the necessary level of coverage that they’re looking for or might be too expensive.
Q
Is there anything else notable from the survey that we didn’t touch on?
A
There were a couple of environmental indicators that we saw. For instance, 26% of respondents said their concerns about COVID-19 would influence their benefit selection this year. And then 85% of respondents are at least somewhat worried about an impending recession, with 36% admitting that they were very worried. I think what you’re seeing here is that there are external environmental conditions, like the fear of impending recession, like concerns about COVID, that could actually lead to some positive change. Employees may be feeling that it is important to educate themselves about their benefits, which are already available—sometimes at no additional cost—by virtue of their employee benefit elections during open enrollment. It’s not great that the survey respondents say that there’s heightened anxiety or that COVID is influencing their decision. But there could be some good that comes out of it. And it could lead to some motivation to educate themselves, which will, again, help generate a virtuous cycle about empowerment and taking ownership over one’s finances.
Tammy Worth Healthcare Editor Read More

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