Employee Benefits Communication Is A Doubled-Edged Sword

By Dan Eisner, Employee Benefits Advisor

Group benefits programs remain one of the most important components of a pay package for employees when deciding to join or stay with an organization. For plan sponsors, they play an important role in attracting, retaining and engaging key talent to run the business. However, if employees do not understand their employee benefits plan, they are unlikely to appreciate the plan’s value as much as they should and will not be fully engaged.

There are some interesting conundrums in the employee benefits industry related to communications, and here are just a few examples indicating that employees may not really understand their broader benefits program:

• It is estimated that 50% of Canadians are dealing with mental health issues in any given year, but we only see 8% utilization on average for Employee Assistance Programs.
• Approximately 20% of Canadians do not have a family doctor, but we do not see significantly higher utilization for Virtual Care programs, when they are provided.
• Many employees still buy personal travel insurance policies even though the vast majority of employee benefits programs have sufficient coverage already built into them.
• Younger employee groups appear to place a higher perceived value on “consumable” benefits (i.e., massage, physio, vision and dental) but do not appear to fully understand nor appreciate the value around catastrophic coverage that might be available (i.e., drug, disability, life and critical illness).

Building a more effective employee benefits program could simply be about better communicating the value of the existing program rather than adding to the program. The cost of any enhanced communication strategy is likely going to be much lower than the cost of providing any new benefits.

Employees may only hear about their benefits program at the time of hire or when changes are being made, which is unfortunate, as employees need continual reinforcement. There are many ways to communicate and engage with employees, and reinforce their understanding of the depth and breadth of the benefits plan, including the following:

• Structured education sessions, perhaps every 2 years, and likely facilitated by the employee benefits advisor.
• Formal education sessions could be held in person or virtually, or on a combined basis, to best meet the needs of more common hybrid working arrangements.
• When provided virtually, educations sessions can be recorded and posted internally along with other resources for future review and for employee onboarding.
• Those recorded sessions could be “cut up” and delivered more frequently as part of a regular calendar in smaller pieces, akin to TikTok videos or YouTube Shorts.
• Questions addressed at these sessions, and the related answers, could be combined into a broader FAQ document or distributed throughout the year (i.e., “Did You Know” campaign).

These are just a few ideas, but education sessions can also help employees better understand the cost of their employee benefits plans and provide them with suggestions to help ensure the sustainability of those plans. At ZLC Employee Benefits Solutions, we expect annual inflation for employee benefits plans to run around 6% to 8% in the long term. Employees need to understand that simply maintaining the status quo on their benefits is effectively giving them a raise. By helping employees better understand the financial risks that employee benefits plans put on the business, these sessions can often help them become better and more knowledgeable “consumers” of those plans. Given that employees are at the front lines of many of the buying decisions related to their benefits, they can play a key role in being more cost-effective “consumers”.

However, here is the “Double-Edged Sword”:

• If you DO communicate to employees about their benefits programs, their heightened awareness could lead to higher plan utilization. Once employees learn more about their plans, they are more likely to use them more frequently. Higher claims costs will likely result in a higher increase in annual plan costs at the next renewal, which may be a surprise to the plan sponsor if not anticipated in advance.

Success in communicating about employee benefits programs can cost the business.

• If you DO NOT communicate to employees about their benefits programs, they may not fully understand nor appreciate them, and they could leave you for roles with better perceived programs with competitors. Any resulting turnover is a real cost to the business. If employees still stay with you even while not fully understanding the value of the program, they will not likely be fully engaged, resulting in a real cost to business.

Failure to communicate about employee benefits programs can cost the business.

So, what are plan sponsors supposed to do. Working with their employee benefits advisor, they can consider the following:

• Discuss where employee benefits fit into the broader total rewards strategy and how important they are relative to the other total rewards components, employee demographics and expectations.
• Assess how the current employee benefits program compares to the competitive landscape, particularly amongst known direct competitors.
• Understand not only where the market is right now but also where it is going in terms of future trends.
• Review current plan utilization relative to broader market trends and benchmarks.
• Develop an employee communications strategy that looks to close any gaps and meet plan expectations.
• Communicate internally to senior leadership around both the current cost pressures on the plan and any potential impact resulting from an enhanced employee communications strategy.

Should you have any questions about the above, please do not hesitate to contact any member of our team at ZLC Employee Benefits Solutions.

Most employee benefits advisors come from an insurance background, but Dan Eisner began his career as a CPA and now he has almost 25 years’ experience in the group benefits industry. This unique experience allows him to:

• Challenge the norms and historical practices in the employee benefits industry over the past 20-30 years
• Facilitate better discussions between HR and Finance professionals
• Analyze benefits plans through a financial and risk-management lens
• Support CFOs and Finance teams with cost forecasting and sustainability modeling
• Align employee benefits strategy with long-term corporate goals and HR strategies
• Leverage the most experienced team in the industry at ZLC Employee Benefits Solutions

ZLC Employee Benefits Solutions is one of the fastest growing advisors for employee benefits and group retirement programs in Vancouver and we are fortunate to have the best people, resources, and clients. We provide value by leveraging one of the most skilled benefits teams – collectively over 500 years of experience within our team of 22 employee benefits specialists. We have been working with businesses ranging from 3 to over 75,000 plan members for over 40 years.