New Benefits Study: How to Fill Risky Gaps in Coverage, Knowledge

Employers and employees may not see eye to eye on many topics, including the adequacy of their paychecks. When it comes to wages and salaries, the amounts are fairly cut and dried. However, the value of contingent elements of compensation—such as health benefits—can be harder to evaluate until claims are filed.

New research by supplemental employee benefits provider, Aflac, reveals a problem related to employee benefits coverage—along with a potential opportunity in that area. The 2021—2022 Aflac Workplace Benefits Trends report found that "several disconnects have emerged between employer and employee perceptions of their workplace benefits." Employers who can effectively bridge any potential gaps may have a leg up on other employers in today's tight labor market.

COVID-19 Impact

Aflac's study focused on the impact that the COVID-19 pandemic has had on employer and employee perceptions regarding benefits. The health hazards posed by the pandemic caused many employees either to take a closer look at their health coverage—or to personally experience its limits. Nearly one-third of respondents reported that the pandemic has made them "more aware of the costs associated with health care."

Meanwhile, 76% of employers believe that their employees are "highly satisfied" with their benefits. But only 62% of employees hold that view.

Unfortunately, employers lack a silver bullet to eliminate dissatisfaction. The long-term trend of rising health care costs has forced 74% of employers to increase employees' share of those costs by raising insurance premium cost-sharing, copayments and deductibles. The study found that only 3% have dropped health benefits altogether.

Rise of Supplemental Benefits

Meanwhile, employers' appetite for offering employees supplemental coverage is on the rise, along with employees' willingness to pay for it. Supplemental benefits enable employees, largely at their own expense, to fill gaps in their employer-provided benefits. (See "Pandemic-Motivated Supplemental Benefits Purchases" below.)

For example, accident insurance pays a flat dollar benefit to policyholders to supplement benefits provided by other policies, such as health and auto insurance. This coverage also might help to defray any medical expenses not covered by the employee's health policy or fill gaps in wages if an injured employee exhausts paid time off benefits during the recuperation period.

Needs of Millennials

Aflac's study also segmented responses by generation. Millennials, the study suggests, have a disproportionately high interest in supplemental benefits. This might be a natural outgrowth of their current ages, a period of life when many have started families. That means more financial responsibility, which can be managed to some extent with certain insurance products.

For example, around half of all employees polled are "highly interested in purchasing supplemental insurance to help cover the financial costs related to COVID-19 or other pandemics," according to the study. But 63% of Millennials held that opinion.

More broadly, the study highlighted an ongoing challenge of getting employees to take a fresh look at their benefits, especially health benefits, on a regular basis. "The overwhelming majority of employees choose the same benefits year after year," Aflac states. What prompts change is when an employee recognizes a need for more financial protection. Unfortunately, that realization often comes only when the need arises—a time when that protection isn't in place.

Be Proactive, Not Reactive

In today's volatile conditions, employees shouldn't take unnecessary chances that put themselves—or their loved ones—at risk. It's important for employees to reevaluate costs and benefits, including any supplemental options, when enrolling in benefits programs.

The next time your employees have the option to update their benefits, remind them that operating on autopilot may lead to costly mistakes. Also provide access to online tools and in-person support to help employees make any changes needed to reflect new financial circumstances.